What is owner financing? It means that the seller of a property is the banker. A nice, short definition is:
“In seller financing, the seller takes on the role of the lender. Instead of giving cash to the buyer, the seller extends enough credit to the buyer for the purchase price of the home, minus any down payment. The buyer and seller sign a promissory note (which contains the terms of the loan).”
From Nolo (link takes you to the whole article)
This option is very popular with folks who have credit issues, people who have dealt with a foreclosure, and those who work as independent contractors and have trouble getting credit because they work for themselves.
What’s the catch? The interest rate is usually a bit higher than you would get with conventional financing, because the lender is taking on more risk. But it’s a great way to build credit so that you can later refinance and pay the original seller back the rest of what you owe.
We have plenty of experience with this kind of lending, so just give us a call at 512-807-8777 if you have questions!