I own a property free and clear and have it for sale with Owner financing. I'm trying to figure out what is the best way to sell it owner financed? What is the process? Do I have to use a RMLO or can I have an attorney draw up the contract and then Close with a title company. I'm located in Houston Texas.
Those that have sold a home Owner financing what process did you go through? How much did you end up paying in total closing costs and did you use a 3rd party loan service?
Thanks for any help you can give!
@Nathan Clark get yourself a good attorney to handle the paperwork. You will want a note, mortgage and personal guarantee prepared and signed by the buyer. You will also want to be sure all of these items are of record at the courthouse. There are some other tricks that will allow you to take back ownership quicker if you have to so seek out someone with superior RE skills and legal knowledge in your area.
Hello Nathan, to protect yourself as a lender in an owner finance transaction, you should use an RMLO to disclose the loan terms to your buyer and verify their ability to repay the loan. The RMLO will provide you an underwriting package with the following items:
- STATEMENT OF COMPLIANCE
- QUALIFIED MORTGAGE REPORT
- CREDIT REPORT
- PROOF OF INCOME
- REQUIRED LOAN DISCLOSURES
- SUPPORTING UNDERWRITING DOCUMENTS
- CLOSING DISCLOSURE
This underwriting package will also help you sell your note for top dollar if you ever choose to shop it!
You should also hire a 3rd party servicing company to collect the payments, pay taxes at the end of the year, provide the buyer with escrow statements, and report on their credit bureau. The fee is very minimal for all they do!
Choose an attorney who has experience with seller finance transactions, and him draw up the promissory note and deed of trust for your closing.
*** Very important, if it is a WRAP Transaction, you must have your attorney disclose the wrap on specific wrap disclosures to the buyer 7 days prior to your closing date.
As far as closing cost, your buyer should be responsible for the entire closing costs.
We recommend you to collect 1 year's pre-paid insurance, 2 month taxes & ins reserves, and include the monthly servicing fee in the monthly payment amount.
Also, if your buyer speaks another language, it is also important that they sign a translation letter of the documents provided.
I am an owner finance specialist and I am here to help answer any additonal seller finance questions you may have.
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