The owner financed land also known as seller financing means exactly what the name suggests. In this option, the buyer does not have to get the loan from the bank or some other institution, but the seller is the one who lends the money to the buyer.
Functioning Of Seller Financing Or Owner Financing Land
To create such a contract there is a promissory note between the buyer and the seller. This clears the rate of interest, consequences of default, and the schedule for repayment. The benefit for the seller is that he/she earns interest. The rate of interest can be higher than any other money lending institute. The seller also has the option of selling the loan to another party. The buyer of the land will now have to pay to the party who is now the owner of the loan.
Seller financing plans can go on for a short time period like four to five years.
The Benefits For The Buyers
1. Faster Closing Process
Buyers and sellers who are careful and experienced will try to choose a closing period in which they can easily perform their duties. In the seller financing, the advantage is that the buyer does not have to wait for a long time for the loan officer of the bank, legal formalities, and different departments to clear the finance file. This complete process can stretch up to 3 to 4 months.
2. Lower Closing Costs
If one is financing the home or the property loan from a bank there are the charges to create the loan, which is also known as the bank fees. Apart from this the buyer of the property also has to pay the appraisal cost to the bank. The case is not as such with the seller financing.
3. Flexibility With The Down Payment Of The Loan
With the banks, there is a minimum amount that is mandatory to be paid by the buyer. It cannot go more or less. This can be very inconvenient. Some people even decide to pay more so they do not have more liabilities in the future. This is not the same as the seller financing. The seller and the buyer can come to an agreement depending on the requirements of both the parties. This type of a deal is good for the seller and as well as for the buyer too.
While opting for an owner financing land you have really good options, but sometimes the deal can even backfire. Whether you are a seller or the buyer the deal has to be chosen very carefully. It is the best option to choose the deal through a well-established property dealer. If you are looking for the right deal, you can contact TheLandSpot.com. We have a fine network where we can find you the best deals for seller financed lands and properties. To know more, contact us at 888-822-0729.