Has anyone done an owner financing house? Or would you do this?

[binny]

Where you were the owner?


I have someone interested in my house but they cant qualify otherwise. Would you do an owner will carry? I know that the contract would have to be iron clad but I wonder how that would work.

I could really use some opinions. Thanks!

 

[Bren's Mom]

My mom did this with a good friend of my uncle's. My parents split, my mom got the house, she couldn't sell it so agreed to 'rent to own' essentially. They had a contract and all, the family was supposed to get a loan by X date. They didn't. And that's where it got sticky. There was the problem of a family living there, mom didn't want to boot them to the street as they were friends of a family member. But at that point mom would have gotten alot more to sell the house. In the end she just waited, until they were able to get the loan. But she'd never do it again.

I'd be cautious.

 

[beavismom]

My brother did it and it turned out badly. The owner let the insurance lapse and the house burned down and my brother ended up having to pay for it. He had some type of insurance that paid a portion of it, but he had to pay the rest out of pocket. The house was purchased by a doctor so my brother felt safe taking the second, turned out to be a very expensive mistake.

 

[BriarfoxinWA]

Personally, if the individual can't qualify for bank financing I wouldn't want to carry a contract. Your basically renting the house to them while hoping that at some point they will be able to actually buy it from you.

 

[4nana]

Unless it was family or friend I could trust beyond the shadow of a doubt, I wouldn't take that route. IMO, there's a reason these people don't qualify for a loan and with the economic struggles our country is having, we never know what tomorrow may bring. Better safe than sorry.

 

[Janet Hill]

I would, but knowing that they are higher risk because they don't qualify for financing, so I would make darn sure they are serious. I would rent to them for the first year at a rate at least 2 times the market with 1/2 the rent money being applied to the down payment and all of which is forfitted if they don't purchase. At the end of the first year, they can either take your financing (at a higher than market rate), or they can get outside financing. A years gone by and if they have a good payment history they may now be able to qualify for financing. If you do finance them, I would escrow property taxes, and insurance just to make sure these are being taken care of.

 

[Carl]

I have done it 8 times. Just get a large enough down payment to discourage them from walking out on the loan. Another way to handle it is to give them a contract for deed. This way you retain ownership to the house until the loan is paid off.

 

[*pixie*dust*]

I do training for a financial institution. In underwriting training, we often use these "owner financed" scenarios --- as "worst case scenario" deals. Trainees have to try to "unravel" these situations in order to offer traditional financing.
Rarely do they end well. One party or the other always comes up as a loser. Sometimes both parties do.

If you go this way exercise extreme caution and have a great attorney.

 

[binny]

Thanks everyone I just found it isnt something the company would let us do anyway ( well we wouldnt get our moving bonus if we did it that way)

So back to the drawing board