Owner Financing
I"m new at this.
I have a house that I want to sell. I have someone interested in owner financing.
Does this mean that they pay off my mortagage and get a convential loan, I put a lien on the house for the difference and they pay me monthly payments?
What would be the most advantageous way for me to approach this?
Thanks
Owner Financing is ....just that ...you're the bank!
You want to sell .... set price....get your down from buyer.... collect payments same as bank....
you can still have a loan in place when doing this ...as in a contract for deed/land contract.....
you're describing an owner carry back 2nd..it sounds like
The only problem with you keeping your loan in place and doing the contract for deed is that your mortgage lender can "CALL" your loan if they find out. Most loans now have a clause so that you ca not "WRAP" the mortgage like that.
Their is NO DUE ON SALE CLAUSE with a Contract for Deed. THE DEED HAS NOT BEEN TRANSFERED UNTIL THE BUYER PAYS THE CONTRACT IN FULL
A lender can call the Due on Sale Clause on a contract for deed. Even if there is no exchange in title, CFD is still considered a sale, so if the lender finds out, they will call the loan due.
Will the lender find out, most likely not, so this shouldn't be to much of a concern. But don't think you avoid the DOS by CFD and tell your lender that is what you are planning on doing, cause they will call the loan.
I have seen ths confusion a lot lately. YES, in most situations the CFD and the L/O WILL act as triggers for the DOS. But the likelyhood of it happening is low. Just be prepared to refi in case it does happen. Plan for the best and the worst.
As confirmation please read your mortgage documents. You will find the clause that states the many reasons for which they can accelerate the loan.
Don't get me wrong, I am an advocate of selling on an L/O, I have some out there right now. But I have the resources in place to solve any DOS issues if they arise.
I don't sell on CFD's because they are a sale and I would rather evict a tenant than foreclose on a buyer.