5 Disadvantages of Buying a Home via Owner Financing in Decatur & Atlanta
If you’re thinking about buying a house from a seller using seller financing (also called “owner financing”) make sure you’re aware of the advantages as the drawbacks! Keep reading this blog post to learn the 5 disadvantages of buying a home via owner financing in Decatur, Atlanta Cascade, Collier Heights or Sylvan Hill so you can be prepared
When a seller wants to sell their home in the Decatur, Atlanta Cascade, Collier Heights or Sylvan Hill areas, they could wait for buyers to come up with bank financing, but there’s another option as well: they can offer owner financing (also called “seller financing”) in which the seller acts as the bank. The buyer simply pays monthly payments to the seller until the house is paid off.
For many people, owner financing is an excellent alternative because it allows buyers to get into a home that they might not have the credit to purchase, plus it gives the seller a steady cash flow if they don’t want or need the large amount of money from the sale of the house.
But is owner financing right for everyone? It may not be.
5 Disadvantages Of Buying A Home Via Owner Financing In Decatur, Atlanta Cascade, Collier Heights or Sylvan Hill
#1. Harder to get
Bank financing is the most common way to sell so some owners might not be aware of owner financing as an option to sell their house. If a bank doesn’t want to finance, maybe it’s not time to buy a home quite yet? That may not please many of the rent to own sellers or the potential buyers, but it’s better to wait then get into a situation that may not fit your budget quite yet. This is not to say that rent to own can’t work, but make sure you have someone else look over the document you’re given.
#2. Fewer options
Because it can be harder to find an owner willing to do owner financing, that might mean you have fewer potential houses to choose from when buying, or it might mean that you have to look at more houses before you find one that the owner is willing to sell through owner financing.
Owner financing comes with many more flexible terms than you might normally get at a bank. However, this can also be a disadvantage because if you are not familiar with the all the possibilities you may overlook a term or you may create a term that does not give you an advantage.
#4. You may pay more
With traditional bank financing, the interest rate is set by the bank. Owner financing may have higher interest rates (depending on the other terms of the contract) and you might end up paying more for the house. However, you might be fine paying more overall if it means you can get into a house that you couldn’t otherwise get into.
With bank financing, you work with a bank and they are professionals who have a code of conduct and industry regulations to follow. But with owner financing, it’s just an agreement between you and the owner so make sure you are comfortable with the owner first before making an agreement with them.