secure financing from their bank. This means that you can close the deal faster, which is beneficial for both buyer and seller. 3. No minimum down payment. There is no government- imposed minimum down payment in owner financing as there would be with a Federal Housing Administration (FHA) loan. This means that a buyer can potentially negotiate a lower down payment if a seller agrees to it. 4. The closing costs are lower. For both sellers and buyers, owner financing allows you the option to cut down on closing costs such as inspections, appraisals, and bank fees. 5. Potentially better investment returns. For sellers, owner financing can offer long-term consistent cash flow on a property from the high interest rate on the loan.
4 DISADVANTAGES OF OWNER FINANCING
Without the safety net of a traditional mortgage loan, there are also several risks that owner financing can potentially carry for a buyer or seller.
1. Higher cost for buyers. Owner financing typically means higher down payments and interest rates for buyers, making the overall cost of the home higher than with a traditional mortgage. 2. High balloon payments. If there is a balloon payment clause in the owner financing arrangement, buyers may be faced with paying back a large lump sum of money at the end of their loan term. 3. Potentially high risk for sellers. Homeowners who take on the financing of their sold home take on the risk of
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