There many prospective buyers who soon realize that their credit is so poor they will not qualify for a loan or if they do it will be very high interest. It isn’t unusual for them to ask if the owner is interested in offering owner financing for the purchase of a home. Obviously, if you have had multiple offers on your home this won’t even be an option you are considering but what if your home has been sitting and the market is stagnant? Should you agree to finance the buyers to move your home off of the market? Consider some of the following before making your decision.
Should You Offer Owner Financing? Answer These Questions First
- Why can’t the buyer get a loan? The fact that someone looking at homes to buy can’t get the proper financing should throw up some large red flags. Why can’t they get a traditional mortgage loan on their own? Something has to have occurred in their credit past like a foreclosure or repossessed vehicle or multiple misuses of credit cards for financing to be unavailable to them. If they have not been responsible with their credit in the past they will more than likely not be responsible with you.
- Do you want to continue paying on two mortgages? The home you are selling is more than likely still part of its own mortgage agreement. The payments your buyers are making to you will be making that payment but it is still in your name. Will having an extra mortgage loan prevent you from gaining another to purchase your new home? What if the buyer’s don’t make a payment? Can you afford to make both mortgage payments in the event that they back out of your financing agreement?
- What happens if they stop making payments? This is where it will get messy for you. If they stop making payments you will still have to make them on your mortgage. If you have an owner financing contract and have turned over the deed you will need to get legal help to solve the problem.
In this day and age, it is not a great choice to offer owner financing. If you have paid off the home you are selling and are comfortable with financing for buyers then by all means give it a try. Just be sure to have the contracts and legalities worked out by professionals. For more help selling your home and the best options for you, contact Doorsteps today.