Owner Financing Can Work For You

A lot of buyers I work with ask me the if I think owner financing is the right way for them to go. To be honest, it all depends on your particular situation.

I mean, we all know that a major part of the 'American Dream' is home ownership. Yet, as lending guidelines have tightened, home ownership has become increasingly difficult.

For many buyers and possibly you too, this has left you with only one option if you want to buy a home and that's some type of owner financing strategy.

Buyers that can benefit from owner financing are...

- Credit Challenged buyers who may have experienced some late payments, collections or possibly bankruptcy.

- Self Employed Buyers who can't prove their income or have changed jobs recently also have a problem adhering to the strict lending guidelines.

- Traditional Buyers who may have great credit, but they have other issues, like lack of a 2 year employment history, that prevent them from obtaining a conventional bank loan.

- Individual Tax Identification Number (ITIN) Buyers which are foreign buyers with no social security number and have a hard time obtaining conventional loans in any market.

- Real Estate Investors who have reached the maximum limit of loans that they can get approved for with a traditional lending source.

Additionally, owner financing is great if you can't afford the high closing costs of a conventional loan because you can save thousands of dollars in closing costs when you are using owner financing.

Plus, owner financing is also ideal if you need to move into a home fast. It can take 30 - 45 days to close using conventional financing, but you can close on a owner finance home in less than a week.

I think that the more appropriate question to ask is, when is owner financing NOT right for me?

My answer to that is that if you are within 6 to 12 months of being able to get a bank loan, and that is your goal, then you need to crunch the numbers and evaluate the home purchase carefully to determine whether this type of purchase strategy is going to benefit you or not.

The biggest factor you'll want to consider is the price and value of the home. Since you'll be refinancing so soon, you will want to make sure the home is going to appraise or have a clause in the owner finance contract to protect you if it doesn't.