A great way to sell a house quickly and for a higher sales price is to offer the house with owner financing. This is sometimes called seller financing. Owner financing allows a buyer to buy a house without having to qualify for traditional financing with a bank. Instead, the buyer pays a monthly mortgage to the seller. The buyer’s name is on the deed, he is paying down a mortgage balance with interest, and is fully responsible for maintenance and upkeep of the house, as well as taxes.
Selling a house with financing provided saves thousands of dollars of financing and closing costs. Who keeps these savings is a negotiable part of the transaction, but generally the result is that the seller gets to ask for a higher sales price to be compensated for providing the loan.
Seller financing with a competitive interest rate attracts buyers who might not be able to get as low of a rate as currently offered in the current market. Or perhaps may not be able to qualify for a traditional loan because of non-W2 income, such as a business owner or 1099 contractor.
The disadvantage of selling a house with financing is the risk that the buyer may stop making payments and default on the loan. In this case the seller has to pursue action against the buyer, maybe even including foreclosing on the buyer. The seller, just like any bank, is protected by the asset. Meaning, if the buyer stops paying, after foreclosure, ownership of the house returns to the original seller who may then sell the property a second time.
If you have a fixed low-interest rate mortgage, buying your house with seller financing is one more way Second Chance Offers may be able to acquire your house.
It’s also a great option to explore as part of a “combination plan” to sell your house by marketing it to several buyers simultaneously (including listing it with one of our affiliates). Contact Us if you would like to discuss this further.
Can I allow someone to assume my loan?
Not likely. Essentially all loans are unassumable, with the exception of some FHA or VA loans. But with those options the buyer has to qualify with the lender again, basically making the assumption pointless.
If the loan is not assumable, how can I legally sell it with owner financing then?
Depending on your loan and situation, there are several ways of doing this, with varying degrees of complexity. Also, new laws in Texas put restrictions on how these sales can be organized. At Second Chance Offers, we have a lot of experience in these transactions and we’d be happy to offer you several options to sell your house this way. Contact Us if you’d like to explore this in more detail regarding your specific situation.