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owner financing

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Can anyone tell me about owner financing?
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November 14 2007 - US

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What state are you in? Do you know exactly what you are asking? the sellers does private financing ? Or they keep there mortgage on this and do something like a lease option.
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November 14 2007
Owner financing is when the owner simply carries the note.

There probably wouldnt be the same rigorous underwriting guidlines, other than proving to the owner u can pay the mortgage.

Interest rate would be higher , probably in the 8s.

Its basically the owner 'shorting' his stock.

He says he would rather sell it now, collect interest on the loan, rather than sit on the house and rent it.

He may have various personal reasons why he has to sell, or simply believes the house will go down in value.

he cant lose since he can just repo the house, and be back where he started.

Same as renting, and a tenant refuses to leave, and has to get a court order to get them out etc.....
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November 14 2007
Profile picture for DebtFreeDave
Real Estate Agent
Contributions: 1312
What do you want to know specifically? This is a broad subject.







http://getprequalified.com
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November 15 2007
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Hamp Yonce

Rock Hill, SC

Real Estate Agent
Contributions: 1688
Zillow All-Star

Since November 2009

He can also take your $, not pay his note, get foreclosed on, and you may as well have been renting.
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November 15 2007
Profile picture for leaseoptionmls
Real Estate Agent

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Owner financing is a great way to buy a home, deals such as these must be structered to the individual buying and the property. A good deal might even net you cash out when you finance property into your name, alot of things are considered credit income and property value, downpayment if any rent credits.
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November 15 2007
i have a quesiton-


I am about to sell my first place-- the next place I purchase im going to put down 150,000 for 200,000 how and what type of credit do you need.

and secondly how does credit change once you have paid off mortgage
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November 15 2007
Lalahave.

you need to have a mortgage professional pull your credit. Go get your credit pulled, and then tell us what the score is, and if you have mortgage lates on it, and when they were late.
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November 15 2007
the owner selling the property and holding the note allows the owner to not have to pay taxes and home insurance.

Of course, as the note holder, you would have to be prepared to always pay the taxes and HOI if your borrower doesnt pay it.

If i owned a property outright, i would probably hold the note if the guy was willing to pay premium dollar for the house, and couldnt get traditional financing.
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November 15 2007
If a Home Seller offers his/her home for sale with the option of owner financing; it will double the amount of interest in their property.

Did you know that if you sell your home with owner financing; these notes can then be sold? You can sell either all or part of the note.

If you would like more information, I'll be glad to help you.
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November 15 2007
If a home seller offers his/her home for sale with the option of owner financing, it will double the amount of interest in their property.

Did you know that once a note has been created, it can then be sold.

You can sell either all or part of the note. If you would like more information, please contact me.
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November 15 2007
Marilyn.

I would like to know more about this sort of thing.

if you have any further info let me know.
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November 15 2007
Profile picture for OCFAVORITEAGENT
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Here is a scenario I recently transacted that may incorporate some of the threads above: 1. The buyer was buying a short sale condo with a 5% down 95% financing program with lender to handle the financing. He would be paying PMI as he was financing less than 20%. He had an average fico with an average interest rate.

2. Two weeks later another similar unit was placed on the market in the same complex with owner financing. We withdrew our first offer from the short sale and spoke with the seller for financing part of the loan. The seller agreed and sold the property for 30k less than the short sale. The new loan was an 80-5-15. The buyer still put down the 5%, the owner carried the second at 15% at 7.5% for 30 years and the lender will finance the 80% at 6.125%. All without any extra points for financing.

This example incorporates some of the benefits noted above in prior discussions. Buyer bought at a lower price sooner, buyer has no pmi, buyer does not have to wait on short sale decision (he may not get the home); Seller happy as days on market are less than two weeks, he gets to carry a note that will earn him more than the bank, he can repo the property if buyer is delinquent, he gets all notices if there are issues, and he gets to close just in time to take advantage of IRS tax exemption.

Everyone is happy. Hope this helps.
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November 18 2007
Do you want to do a lease option?
Larry
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November 18 2007
Profile picture for OCFAVORITEAGENT
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I left off another buyer benefit. In the first scenario the pmi paid was not tax deductible. In the second scenario the owner financing interest portion is tax deductible. When the transaction was finalized he had a lower monthly note with a higher tax benefit at year end.
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November 18 2007
 

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