How to sell on owner finance

2 Replies

If you have significant concerns about foreclosing - then owner financing is probably not the right strategy.  The biggest protection against foreclosure is a down-payment.  While the upside of owner financing can be appealing, if a bank doesn't think some one would pay a mortgage, why would they pay you?

Having said that there may be situations where owner financing is a good option.  One is selling to an established investor who has a strong equity position, but has maxed out the number of bank loans.  Another may be if you have an established tenant who pays on time and has saved up a down payment.  It also can be used as a "bridge loan" if they need to sell another property to finance the one you are selling.

Good points Jesse.

Owner occupied sales need to go through a mortgage originator unless you are exempt as an owner occupied seller, even then the rules should be applied to keep you from having future issues.

If you are exempt from the Dodd-Frank Act, you need to document how you are exempt, a statement in the note referencing the exemption is a good idea!

The best way is with a note and deed of trust or mortgage providing a non-judicial foreclosure process. Any installment contract can get messy with equity established by a buyer and force you into a judicial process, that means an attorney in front of a judge to foreclose.

Also, check with a mortgage servicer, there are several on the internet, without specific knowledge of servicing you shouldn't try collections on your own. :)

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