Owner financing for home purchases is becoming very popular in Florida.

If you ask a seller to offer owner financing to purchase their home, it can be a complicated matter. In part this is because, if you ask the list agent if the owner will provide a portion or all of the financing, the agent is not likely to know because the option to the seller upon completing the listing agreement.

If you were to ask the seller directly, the seller is not likely to agree to owner financing. Sellers often reject the idea of ​​owner financing because nobody presented to them the many positive benefits of owner financing as a way to sell the house.

Most sellers knowledge is limited to traditional methods, where the buyer goes to the bank to get a mortgage.

But for a seller whose home is not getting sold, or when traditional lenders are watching qualifying guidelines closely, owner financing suddenly becomes a great option. Owner financing is definitely a viable option in a buyer's market. More for a sales price and a good return on the mortgage investment.

What is owner financing?

Part or all of the purchase price, less the buyer's down payment made to the seller, the seller is providing owner financing.

Whether the property has an existing loan, except to the extent that the existing lender may accelerate the loan sale because of an alienation clause. In that case, a lease with an option to purchase for the buyer is in the best interest of both parties.

If the property is free from liens, which means that the seller has the property without a loan, the seller may agree to take owner financing by any number of means, money down, interest rate, and term.

In this case, the buyer and seller agree on an interest rate, down payment, monthly payment amount and term of the loan.

The deed is typically recorded in the public records, which protect both parties.

While there is no standard payment required, many sellers want a payment sufficient to protect their assets. The mode of down payment can vary from zero to 30% or more of the purchase price. Higher down payments are good practice for the buyer is less likely to go into foreclosure if they have invested a lot of money upfront.

Land contracts do not pass title to the buyer, but give the buyer equitable title. The buyer makes payments to the seller for a specified period. On the final payment or refinancing the buyer receives the deed.

Sellers can sell the mortgage for the entire balance of the purchase price (less deposit) and that can include an underlying loan.

This type of financing is "all inclusive mortgage" or "all-inclusive trust deed.”

The seller will receive a replacement for the interests of the underlying loan. A seller can also lead to lower mortgage; in this case, the buyer would be subject to title for the existing loan or a new first mortgage.

The buyer receives a certificate and gives the seller a second mortgage for the remainder of the purchase price, less the deposit and the amount of the first mortgage.

Lease Purchase Agreements. After completion of the lease purchase agreement, the buyer receives title and typically receives a loan to the seller to pay after receiving due credit for all or a portion of the rental payments of the purchase price.

Even if the seller requires a buyer's credit report the seller is usually more flexible and less stringent than those requirements imposed by conventional lenders.

Interest rates can be adjusted periodically or remain in a rate for the term of the loan.

Lower closing costs. Due to not having to deal with an institutional lender, no loan or discount points. No processing fees, administrative fees or other various different lender fees typically charged that automatically saves the buyer closing costs.

Possession faster. Because buyers and sellers do not wait for a lender to process the financing, the buyer can close quickly.

Owner Financing Benefits for Sellers. Higher selling price. Since the seller offers owner financing, the seller may be able to command full list price or higher.

Higher interest rate. Owner financing may be a higher interest rate that is in a money market account or other low-risk investment strategy.

To view listings from coast to coast of owner financed homes in Florida, or if you have any questions whether you are a buyer or seller interested in owner financing please call Jaz Zydenbos, Tropic Shores Realty at 800-819-4793.