Owner Financing Homes For Sale
“No Credit Check Rent To Own & Owner Finance Properties For Sale”
We make it possible to buy a home even if your credit is in the toilet…
No Credit Check Owner Finance Homes For Sale
We have the largest source of seller financing homes available. Bad, Ugly or No Credit, Okay! No credit check seller finance homes for sale.
If you have bad credit your ability to qualify for a conventional mortgage to buy a home is very unlikely. Your best option to achieve the American dream of home ownership is buying a seller finance or a rent to own home.
In this guide, you will learn:
- What owner financing is.
- How owner financing actually works.
- How to find these types of homes.
- How to buy a seller financing home.
Then we will discuss the pros and cons of owner financing.
Let’s start off by first defining the term “what is owner financing homes“.
What is owner financing homes?
Owner financing homes (also known as seller financing) are homes able for sale even if you have bad credit without qualifying for a traditional mortgage. Instead the seller sells you the property at an agreed upon price and terms. In this type of transaction the seller finances the entire purchase price and often includes a balloon payment due at a future date.
This process simplifies the home-buying process by eliminating the need for banks, appraisals, home inspections, and red tape.
How does owner financing work
In this arrangement the seller agrees to sell by financing the home’s purchase price minus the buyer’s down payment. The buyer makes regular scheduled monthly payments on the loan until it’s paid in full or until a future date.
The transaction is normally closed at an attorney’s office and the buyer signs a deed and promissory note that spells out the seller financing terms, including:
- Interest rate
- Loan repayment schedule
- Consequences if you default
The loan is usually amortized over 30 years to keep the payments low, with a final balloon payment for the remaining balance due at an agreed upon future date.
The buyer should ideally have enough equity in the property before the balloon payment date or plenty of time to improve their credit and financials in order to qualify for a traditional mortgage. In some cases, the loan is financed for the entire 30 years or until paid in full.
View our current owner financing properties for sale before moving on.
Types of owner financing
Okay, now that you’ve got a better understanding of the basics, let’s go a little bit more deeper on the process of owner financing.
There are many different types of owner financing. We will now discuss the three different types of financing that allow you to buy a home with bad credit. Each of which has its own unique benefits and drawbacks.
Land Contract
A land contract or contract for deed (bond for deed) is an arrangement between the seller and buyer. The buyer makes scheduled monthly payments directly to the seller until paid in full. The deed is not transferred from seller to buyer. The seller retains title (ownership) until final payment then the deed is transferred to the buyer. However, a notice of sale is recorded with the county clerk’s office to protect the buyer’s interest. The drawbacks is that the buyer can not write off the taxes and interest payments made in this type of arrangement.
Benefits:
- Fast closing for the buyer & seller
- Having bad credit is not a disqualifier
- No lender involvement
- Low down payment
- Flexible financing terms
When everything goes according to plan, land contracts can be very beneficial for both the buyer and seller.
Rent To Own
In a rent to own or lease to own arrangement, the tenant buyer agrees to rent the property from the seller at a prearranged price for one to five years. The tenant buyer signs a lease and a real estate purchase option agreement and pays the seller a non-refundable deposit. The non-refundable deposit is applied towards the purchase price when the tenant buyer executes the real estate purchase option agreement. The only drawback is if the tenant buyer chooses not to buy the property they lose their non-refundable deposit.
Benefits:
- No credit check
- Easy to qualify for compared to traditional lender requirements
- Flexible financing terms
- Fast closing & low closing costs
- Low down payment
- Purchase price is locked in for one to five years.
- Move into your dream home while you improve your credit & financials
Similar to a land contract the title (deed) to the property is not transferred until the tenant buyer exercises their real estate purchase option agreement and buys the property.
Don’t forget to check out our inventory of rent to own homes for sale
Seller Finance Mortgage
In its simplest terms, a seller finance mortgage is when the seller finances the buyer’s mortgage. By doing so it eliminates the need for conventional financing and makes it possible to buy a home with poor credit.
Benefits:
- Flexible financing terms
- No Private Mortgage Insurance
- No prepayment penalty
- Low down payment
- Lower closing costs
- Bad credit is not a disqualifier
- Taxes and interest payments write off
- Title (ownership) is transferred at closing to buyer
In this type of transaction the property owner and buyer agree on the loan terms.
The interest rate, monthly payments, and the consequences if the buyer defaults on those obligations.
At closing the title is transferred to the buyer, buyer pays a down payment, signs a promissory note, and a deed of trust. The note and deed is recorded at the county clerk’s office by the closing attorney.
Have you seen our inventory of seller finance homes
Example of owner financing
Okay, let’s say that you find a home for sale that’s available with seller financing for $200,000. The seller agrees to sell the home to you for $200,000 with 10 percent down payment, $20,000. The seller agrees to finance the remaining balance of $180,000 at 5 percent interest rate fixed over 30 years amortized, with a balloon payment due after 10 years.
In this example, you agree to make scheduled monthly payments of $966.28 to the seller for the next 120 months excluding the taxes and insurance that you’ll pay separately.
At month 120, a final balloon payment of $150,237.85 will be due to the seller.
To avoid possible payment errors it’s best to make your payments through a third party loan servicing company. The servicing company’s job is to collect and process your payments and pay the seller. They will track each payment that you made towards the principal and interest to prevent possible loan balance errors. They can also escrow for taxes and insurance and pay them when they are due.
Last but not least, a loan servicing company can report your on time payments to each credit bureau to help you with the refinancing of your loan in the future.
Pros and cons of owning financing
As a buyer, seller financing has a lot of advantages and disadvantages that needs to be considered before entering into this type of arrangement.
Pros:
- Faster closing: you don’t need to get an underwriter approval, legal department, or loan officer approval.
- Cheaper closing costs: seller financing eliminates the need for appraisals, loan origination fees, inspection fees, and lender fees.
- Lower down payment: unlike banks and government loans that require minimums, owner financing does not.
- No credit requirements: unlike a banks loan minimum credit score requirements, owner financing does not have any.
- Flexible and creative financing terms: seller and buyer are free to negotiate favorable loan terms. This gives both parties the freedom to structure the owner financing terms more creatively.
Cons:
- Higher interest rate: you will likely pay a higher interest rate with seller financing compared to that of a bank’s interest rate.
- Need the seller approval: Even though the seller is okay with owner financing there is still a chance that they might want to be your lender.
- Balloon payment: A lot of seller financing agreements include a final balloon payment due date. If you’re unable to refinance or pay off the loan then you risk losing your investment and the property.
As you can see, the advantages far exceeds the disadvantages in an owner financing transaction. It really all comes down to whatever terms that you and the seller ultimately agree works best. The sky’s the limit.
How to find owner financed homes for sale
After weighing the pros and cons, if you still believe that owner financing is for you. We’ll now show you how to find seller financed homes that will help you get another step closer to becoming a homeowner.
It’s time to start your search to identify properties offering “seller financing“, “owner will carry“, or “owner financing“, which can be easier said than done.
Below, we’ve compiled a list of the different ways to find owner financed properties for sale in your area.
- For Sale By Owner Websites: you can find potential properties for sale with seller financing on sites like; Fizber.com, Become.com, FSBO.com, Zillow.com, Redfin.com, and Ownerwillcarry.com
- Find a reluctant landlord: Call for rent signs and ads advertising rentals in your area. Some of these property owners will be open to providing seller financing.
- Online Classified Ads: try searching classified ads websites (Craigslist or Penny Savers) and your newspaper for owner-financed properties for sale. You can also post your own ad to find sellers open to the idea of owner financing.
- Work with an experienced Realtor: find a realtor that understands how seller-financing works. The agent can do a custom search on the MLS for properties that mention owner financing in the listing. They might know of motivated sellers willing to explore creative financing options.
- Networking: reach out to your family, friends, coworkers, neighbors and social media contacts. Let them know that you’re looking for an owner financed home to buy. You can also post a message on Facebook Marketplace that you are looking for an owner finance house to buy.
Where to find owner financed homes
As you can see there are many ways to find an owner finance home for sale. You can even do a Google search for “owner finance homes for sale near me” to find websites that connect buyers and sellers.
How to buy a home with owner financing
Many sellers have trouble finding buyers especially if their property needs work, hard to rent, vacant, or if they’re upside down on their mortgage.
Tell the seller that if they are willing to consider owner financing you will pay a higher price to buy the home. There are three main terms that you will need to negotiate with the seller when doing a seller finance deal.
- Down payment: This is typically 10-20 percent down.
- Interest rate: Typically range between 5 to 10 percent.
- Monthly payments & Maturity Date: Usually the payment is amortized over 30 years. The maturity date is typically 3 to 10 years when the loan has to be paid off.
It’s important to remember that if you decide to buy an owner financed property to protect yourself by getting everything in writing. You should also have an attorney review everything and draft the paperwork.
Remember that the key to buying a home with seller financing is being able to find motivated sellers.
FAQ Questions about owner financing homes
Is owner financing a good idea?
Yes, owner financing is a good idea if you are self-employed or have poor credit that prevents you from being approved for traditional bank financing.
Is owner financing safe?
Owner financing is safe as long as the terms that you agree to with the seller is review by an attorney before you sign.
What if the buyer defaults?
If the buyer defaults on the agreed terms then they run the risk of losing the property. The seller can foreclose to get the property back if the buyer fails to pay. In a rent-to-own arrangement the tenant buyer will be evicted and loose their non-refundable deposit investment.
What are the risks of seller financing?
The risk and or downside of selling financing is if the buyer defaults on the loan, the seller can foreclose or evict the buyer.
The Bottom Line
If you are a buyer, and your goal is to achieve the American dream of home ownership. But your credit prevents you from qualifying for traditional bank financing then seller financing might be for you.
With a reasonable down payment and the ability to make your payments, you can buy the home of your dreams.
Are you ready to take your first step towards becoming a homeowner?
Go here to find a great seller financed homes for sale
…if you still have questions visit our How It Works page and the FAQ Page to get answers to the most frequently asked questions. After your done don’t forget to visit our Reviews Page to hear what our past clients had to say about us.