Buying a house with Owner Financing : Ins and Outs (real estate, foreclosures)

[ShakyJ]

Title pretty much says it all.

In short my wife and I are looking at this as an option vs conventional loans as there is a clear amount of these options around here.

Thats said, I am lacking a basic understanding of the process. I have purchased many homes before with a conventional mortgage.

With owner financing...

What am I expecting to put for a down payment?
How relative is credit vs past rent/mortgage history?
What if the owner still has his house with a loan ( not in default ), how does that come into play?
I am assuming owner finance is to be refinanced in X years?

Any thoughts or expereince are appreciated. We are looking at the Palm harbor area.

Thank you,

[123456m]

Be very careful that the house you are purchasing isn't already in the stages of foreclosure. You can look up their tax bill, as it is public record, to ensure that it has been paid. I would suggest working with a real estate attorney.

[gypsychic]

I would not do owner financing on any property that is still encumbered by a mortgage. There are quite a few investors out there buying up foreclosures for cash and reselling via owner financing. I would definitely get an attorney to check title and represent you. Down payment is up to the individual selling the property, sometimes they are negotiable, it's all negotiable really, unlike a regular lender.

Good luck on it.

ETA: Another way of owner financing is finding someone with an assumable mortgage that you assume and have the seller take back a second.

[ShakyJ]

Oh I am well aware of the need to check out the title, liens, etc etc. I just dont know the details vs the conventional way. pros/cons, etc.

[Innertuber]

It's pretty much whatever you negotiate if it's owner finanaced. The leverage swings to whoever wants the deal the worst.

Personally, I would not do a transaction which leaves the original mortgage in existance or anything creative with title/ownership.

[tom11011]

I recommend against owner financing where the owner himself still owes a mortgage on it. Remember, with a normal bank loan, your name is on the deed to the home with the bank as a lien holder. This will likely not be the case under this scenario, how will your name be added to the deed? It would likely trigger an "assumption clause" in the mortgage agreement with the buyers bank and they will call the loan due.

Even if it is just a private deal between the two of you, keep in mind that 1.) Your name probably won't appear on the deed and 2.) You are trusting the buyer to continue to make mortgage payments himself with your money.

[algia]

IF The house is paid off, then go for it if you trust them, if not forget it.

[newyorker24]

In all th cases I've heard of, the interest rate is higher than a bank would charge. Not sure why anyone would do this unless they couldn't get approved by a bank.

[Innertuber]

Lower points is one reason.

[crazynip]

This sounds like something I would avoid like the plague.