The basics of buying an owner financed house via @homebidz

The Basics of Buying An Owner Financed House

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The dream of owning your own house has existed for decades. Being a real homeowner comes with advantages: happiness, investing, pride are just a couple -- and that is not even referring to the real facts. Because most individuals do not possess the fluid money to buy a house outright, financing from banking and lending institutions have assisted many homeowners in fulfilling their visions through home loans. So, this all sounds fantastic, but it's like the secret gem hidden in a pile of straw -- the unicorn of the home buying process. How does seller financing work in real life?

You Still Have to Get a Real Loan with Seller Financing

The reality is that, even though you might experience the benefit of bypassing a bank, owner financing will still require you to get a "real" mortgage, with "real" terms and contracts. This mean that, although the seller may be financing the loan, they will still want a payoff. So, be prepared to undergo a credit check anyway.

Owner Financing is Not the Same as Rent to Own

Although rent to own options and seller financing do go hand-in-hand, they are not the same thing. Rent to own home-buying is something that people take advantage of in the meantime while waiting to build credit in the event that they are able to take out a mortgage in the future. Seller financing is when the owner of the home you're purchasing has the capital to invest back into their own property, usually with the opportunity to gain interest from you, the buyer.

What Makes Buying From and Lending From the Same Person Beneficial?

As a home buyer, where do you want your interest payments to go? Would you rather pay the homeowner or a billionaire bank? If something should go wrong, and you home goes into foreclosure, who do you want to get the house? Although it's less common, seller financing provides the most benefit to the seller, as well as the buyer.

In Conclusion

In the case that you choose to go with seller financing, rather than taking out a loan from a mortgage lender or a bank, understand that you still need good credit, and you still need real contracts, title companies, escrow, interest, and all the other things that go into home buying. Help out the little guy while helping yourself, if you can afford to!

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