Asking a seller to give you owner financing to buy a home can be a tricky proposition. That's partly because if you ask the listing agent if the owner will carry some or all of the financing, the agent probably doesn't know. Why? The agent never asked.
If you ask the seller directly, the seller is likely to say no. Sellers often reject the suggestion of owner financing because nobody has explained the benefits or proposed owner financing as a way to sell the home.Most sellers don't sell a home every day. Their knowledge is limited to conventional practices where the buyer goes to the bank to get a mortgage.
However, for a seller whose home isn't selling or when traditional lender guidelines are tightened, owner financing suddenly becomes very popular. Owner financing is definitely a viable option in buyer's markets.
What is Owner Financing?
When part or all of the purchase price, less the buyer's down payment, is carried by the seller, the seller is providing owner financing. It doesn't matter if the property has an existing loan, except to the extent that the existing lender might accelerate the loan upon sale due to an alienation clause. Instead of going to the bank, the buyer gives a financing instrument to the seller as evidence of the loan and makes payments to the seller.If the property is free-and-clear, meaning the seller has clear title without any loans, the seller might agree to carry all of the financing. In that instance, the buyer and seller agree upon an interest rate, monthly payment amount and term of the loan, and the buyer pays the seller for the seller's equity on an installment basis.
