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Posted: 9/25/2007 10:28:36 AM EST
I was in talks with a seller and they mentioned that if I didn't want to get bank funding for it they could finance it themselves and give me a warranty deed. Can anyone here give me the pros (if they are any) and cons to this?
Link Posted: 9/25/2007 11:21:55 AM EST
We've bought two properties that way, the only problem we had was the seller didn't know anymore than us and the paper work dragged on for a few months after the last payment, the next one I had to edjucate the seller. The nice thing is you can negotiate the rate and payment , and you are not working with a shister. I usualy didn't care about the interest rate and tried to get the monthly payment low and then payed 4-5 times that each month to get the pricipal low soon and also have the security of haveing a low payment if I lost my job.
Link Posted: 9/25/2007 11:49:39 AM EST
something like this would have no effect on your credit, either positive or negative, right?

it's like a private sale or working under the table, generally nothing is reported unless someone doesn't fulfill their end of the bargain?

Link Posted: 9/25/2007 12:09:25 PM EST
I guess so I have no credit, but I have good assets.
Link Posted: 9/25/2007 12:58:47 PM EST

Originally Posted By Rich219:
I was in talks with a seller and they mentioned that if I didn't want to get bank funding for it they could finance it themselves and give me a warranty deed. Can anyone here give me the pros (if they are any) and cons to this?


We financed 3.5 a with 5k down and 200 per mo for 6 yrs. Can't beat the

8% rate to get paid off quick. Went thru a lawyer as this was just one parcel

of several he subdivided. couldn't recomend it any higher.

Who need's credit I pay only cash.
Link Posted: 9/25/2007 1:34:05 PM EST
Is it advised to have the contract looked over by a lawyer? If so what does this run to have it looked over?
Link Posted: 9/25/2007 3:02:38 PM EST
MUCH cheaper to have an attorney write a real estate contract than a realtor.

Link Posted: 9/25/2007 3:48:10 PM EST
When I bought my little slice-o-heaven in Maine I did owner financing. The guy selling was an old logger and he was selling a bunch of places, had his lawyer do it up and worked great. I was in for 10years but paid it off in 2.

Good luck!
Link Posted: 9/25/2007 4:04:57 PM EST

Originally Posted By Rich219:
Is it advised to have the contract looked over by a lawyer? If so what does this run to have it looked over?


Get a lawyer to do it and make sure the title stuff get's done correctly. The last thing you want is to find out that everything is messed up 30 years down the road and you realy don't own the property. You pay for the lawyer so he is working for you. It should not effect them financing it themselves at all and it protects you from getting screwed.
Link Posted: 9/25/2007 6:32:50 PM EST
In most states, I believe the buyer has significantly fewer rights if he defaults (e.g., misses a payment or two because of a medical emergency) if he is using owner financing than if he finances through a traditional lender and actually buys the property up-front, subject to repaying the lender. The laws on this also vary considerably from state to state.

I have no idea how much you're planning on paying, but assuming it's over $20k I think you'd be nuts not to hire a lawyer to explain the consequences of using seller financing vs. traditional financing, and to make sure everything else is in order. Ask around, get a recommendation.

I know of one real estate guy who has done quite well selling and financing homes to buyers on 10-year contracts, and somewhere along the line the buyers have missed some payments and he's taken the properties back, with the improvements made by the buyers and the benefits of appreciation, and the buyers are left out in the cold.

When you buy from an owner who also finances the purchase, the owner (seller) typically has a lot more rights in the property--which is a bad thing from the buyer's perspective--than a bank or mortgage company would have with traditional financing. That doesn't necessarily mean it's a bad thing, but you really need to understand what you're getting into before you sign anything.

In my opinion.
Link Posted: 9/26/2007 1:29:22 AM EST
I bought my house(on 2.39 acres) through a land contract. The price was $52,000 and I put $10,000 down and the owner financed the remaining $42,000 for a period of 10 years at a 6% interest rate, putting my payment at $466.29/month and I pay the taxes out of my pocket. The owner hired a lawyer to write the contract and cost him $300 for that service. They explained everything, and as I have some experience reading legal jargon the contract was very easy to comprehend. That will have been 4 years ago in November and I couldn't be happier with this decision. I give the seller postdated checks at the end of each year for the coming year so mailing isn't necessary. I was also given an amortirization (sp?)schedule when I signed the contract so it makes the info easily available at tax time.
Link Posted: 9/26/2007 2:45:07 AM EST

Originally Posted By EndGame:
In most states, I believe the buyer has significantly fewer rights if he defaults (e.g., misses a payment or two because of a medical emergency) if he is using owner financing than if he finances through a traditional lender and actually buys the property up-front, subject to repaying the lender. The laws on this also vary considerably from state to state.

I have no idea how much you're planning on paying, but assuming it's over $20k I think you'd be nuts not to hire a lawyer to explain the consequences of using seller financing vs. traditional financing, and to make sure everything else is in order. Ask around, get a recommendation.

I know of one real estate guy who has done quite well selling and financing homes to buyers on 10-year contracts, and somewhere along the line the buyers have missed some payments and he's taken the properties back, with the improvements made by the buyers and the benefits of appreciation, and the buyers are left out in the cold.

When you buy from an owner who also finances the purchase, the owner (seller) typically has a lot more rights in the property--which is a bad thing from the buyer's perspective--than a bank or mortgage company would have with traditional financing. That doesn't necessarily mean it's a bad thing, but you really need to understand what you're getting into before you sign anything.

In my opinion.



This is correct! I know someone who has sold the same property 2 or 3 times. Foreclosure is much easier this way as opposed to a mortgage.
Link Posted: 10/8/2007 6:07:40 PM EST
What if creditors go after the seller? He still owns it, until it is paid off? So they can take the property you have been paying on, for years? It used to be that way around here. (currently I don't know, I'm asking). Know what you are getting into. Hire an attorney.
Link Posted: 10/9/2007 8:16:47 PM EST

Originally Posted By Campingout:
What if creditors go after the seller? He still owns it, until it is paid off? So they can take the property you have been paying on, for years? It used to be that way around here. (currently I don't know, I'm asking). Know what you are getting into. Hire an attorney.


To the best of my knowledge, which is weak at best, in most states the seller retains a legal interest in the property that is subject to the buyer's equitable interest in the property. Which basically means that the seller has a "security interest" in the property that entitles him to receive monthly payments (or whatever) from the buyer according to the terms of the contract between them. The creditor would have no more rights than the seller had, perhaps especially if the contract for deed or other conveyance between the buyer and seller was properly recorded. Don't count on this being accurate in your state, or even mine, but that's my general understanding.
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