Owner Financing

Owner financing is a situation in which the owner of a home or other piece of real estate agrees to provide financing for potential borrowers in lieu of bank or private financing. Typically, this occurs by the buyer of a property making payments directly to the owner of a property over several years. Formal loan paperwork is usually completed during the sales process. Terms of the loan, including interest rate and monthly payment, are settled before closing. The deed to the property is retained by the seller until the property has been paid off, much like a typical bank loan. In the event of non-payment, the seller retains the right to foreclose on the home. Owner financing can be a good way for someone with bad credit or other issues with obtaining a traditional mortgage to purchase a piece of property. It can also be a good way for a seller to attract a buyer to his or her property.