Owner financing gives you, the homeowner or real estate investor in Texas, the opportunity to finance the sale of a property instead of requiring the buyer to secure a bank mortgage. Not only is the bank cut out of the deal, but this process doesn’t require an inspection or an appraisal unless the buyer insists on including them. In addition, you may be able to secure a large down payment, a higher interest rate than is offered by the banking community for the monthly payments, as well as a balloon payment in as few as five years.
Sound interesting?
Here’s the overview.
The seller and the buyer create the terms of the agreement. This includes the down payment amount, amortization schedule, and final payment, for which there are options such as monies obtained from refinancing the mortgage or a balloon payment. After the final payment is made, the seller provides an executed document stating that the mortgage has been fully paid or provides the title to the owner.
It’s important to note that the buyer is responsible for making the tax and insurance payments, as these are not part of the monthly payment made to the seller.
Benefits to the seller
- You still own the title to the property if for any reason the buyer does not fulfill his or her monthly payment obligations . . . and you keep all the payments that were made.
- The sales process is shorter and easier.
- You are not required to make any repairs to the property before the sale.
- You negotiate the interest rate amount, down payment, and loan repayment schedule.
Benefits to the buyer
- Owner financing may be the best financial option available for the prospective buyer.
- There is no origination fee for the buyer.
- The closing costs are lower.
- Title insurance is available for most owner financed deals.
However, there are potential regulatory issues being considered currently.
We highly recommend engaging the services of a real estate attorney to ensure that the legal agreement made with the buyer covers all the necessary terms and conditions.
If you are looking for flexibility in selling your property, owner financing may be a great option to consider.
Gaylene Rogers Lonergan
Lonergan Law Firm, PLLC, 12801 N. Central Expressway, Suite 150, Dallas, Texas 75243
(214) 503-7509 | grogers@lonerganlaw.com | LonerganLaw.com
© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2024. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.
