At Homes You Own, we understand that securing traditional mortgage financing can be a challenge, especially for those with less-than-perfect credit. That’s why we frequently offer seller financing or owner financing as a flexible and accessible path to homeownership.
What is Seller/Owner Financing?
In a nutshell, seller financing means that instead of getting a loan from a bank or traditional lender, you make your home payments directly to us – the seller – “Homes You Own.” We act as the lender, and you, the buyer, make regular payments to us according to an agreed-upon plan.
How Does It Work for You?
Here’s a step-by-step breakdown of how seller financing typically works when you purchase a property from Homes You Own:
- Find Your Home: You’ll browse our available properties, many of which are eligible for seller financing.
- Application & Negotiation: Once you find a home you love, you’ll complete a straightforward application. We’ll verify your employment and ability to pay. We’ll then work with you to negotiate the terms of the financing, which may include:
- Purchase Price: The agreed-upon price of the home.
- Down Payment: A portion of the purchase price paid upfront. While typically required, we aim for reasonable down payment options (Most homes are $1,000 to $5,000 down payment).
- Interest Rate: The rate at which interest accrues on your loan.
- Payment Schedule: How often you’ll make payments (e.g., monthly) and the amount of each payment.
- Loan Term: The duration of the financing agreement (typically 30 years).
- Legal Agreement: Once terms are agreed upon, we’ll draw up a formal legal agreement, often in the form of a promissory note (your promise to repay the loan) and a deed of trust or land contract (which secures our interest in the property until the loan is paid off).
- Making Payments: You’ll make regular, agreed-upon payments directly to Homes You Own. These payments typically include principal (reducing the amount you owe) and interest. You’ll also be responsible for property taxes and homeowner’s insurance, just like with a traditional mortgage.
- Building Equity and Credit: As you make payments, you’ll build equity in your home. This is a crucial step! The goal is to use this period to improve your credit score and financial standing.
Key Benefits of Seller Financing with Homes You Own:
- More Accessible: It can be a lifeline for buyers who don’t qualify for conventional loans due to credit challenges.
- Flexible Terms: We can often be more flexible with loan terms than traditional lenders.
- Faster Process: The closing process can be quicker as there’s no bank underwriting involved.
- Fewer Fees: You may save on some of the typical closing costs associated with traditional mortgages.
- Direct Relationship: You’ll have a direct line of communication with us, the seller.
Important Considerations:
While seller financing offers fantastic opportunities, it’s essential to understand that:
- Interest rates might sometimes be slightly higher than prime traditional mortgage rates, reflecting the increased risk we take on as the lender.
- Purchase price might also be higher than normal or market rates to facilitate offering a property at a specific monthly payment due to state limits on interest rates (usury laws).
- We always recommend consulting with an independent real estate attorney to review any seller financing agreement before you sign.
Examples of what we can do:
We work hard to find homes that can fit every budget. Here are some examples of what it might look like to purchase a home from Homes You Own.
- $59,000 = $1,000 down, $725 per month for 30 years
- $69,000 = $2,500 down, $825 per month for 30 years
- $79,000 = $3,000 down, $925 per month for 30 years
These rates are available regardless of credit scores. If you have a job and the down payment, we can get you into home ownership of one of our properties.
Ready to explore if seller financing is the right option for you? Contact Homes You Own today to discuss our available properties and how we can help you achieve homeownership!