Life happens and sometimes getting a bank loan isn’t an option. But that doesn’t mean you need to give up on your dream of owning your own house on your very own land.
Santa Cruz Properties turns dreams into reality by offering you the opportunity to purchase land through owner financing. If you have bad credit, or even no credit, the real estate professionals at Santa Cruz Properties can help you overcome those hurdles that a traditional bank loan might bring and make you the proud owner of your very own property.
Owner financing, also known as seller financing, offers many benefits to the buyer, but you might have some questions when deciding on whether or not to use this option.
Santa Cruz Properties is here to help.
What is Owner Financing?
Owner financing is a simple concept: the seller (owner) will finance the purchase. Owner financed property can include houses and commercial property but is more frequently seen with land.
The owner of the property takes the role of the bank and develops the terms by which the loan will be paid back. Just like what would occur with a bank loan, a contract is drawn up that will inform the buyer and seller of the repayment schedule, fees, yearly interest rates, and any penalties that will occur if the payer defaults on the loan.
There are a few other things a potential buyer should be aware of:
- Owner financed loans are generally short-term, about five years or less, and end with what is known as a balloon payment – which is a payment due at the end of the loan covering the remaining balance. Ideally you will be able to refinance before the final payment, but because such a large amount will be due, failure to do so can lead to a default and legal issues.
- The seller is capable of selling the loan to another investor. This means you could potentially make payments to someone else other than the original seller.
- Buyers should be prepared to pay a higher interest rate than what is typical of a traditional house mortgage (and for a shorter amount of time).
- Missed payments can quickly lead to foreclosure with the seller allowed to keep any down payment monies and monthly payments.
- You still have to prove you are capable of handling owner financing. The fact that you did not qualify for a traditional mortgage can mean credit issues and a habit of defaulting; validate why you are trustworthy.
What are some of the benefits of owner financing?
Interestingly, there are actually quite a few benefits for the seller just as there as there are for the buyer.
For sellers the benefits include:
- During periods of high interest rates, owner financing allows land sellers to draw in more interested buyers.
- It minimizes carrying costs.
- It provides an opportunity to quickly obtain funding for other purposes.
As for buyers, the benefits are plentiful. Advantages for buyers include:
- Because there’s no dealing with the long processes and legal aspects that come with a bank loan, the closing process is much faster.
- The down payment can actually be negotiated to whatever you and the seller agree upon. This isn’t always guaranteed, but it’s nice to have some flexibility to work things out better for yourself.
- Lower closing costs. When you deduct the bank fees, appraisal costs, land surveying costs, and more, buyers can actually purchase the property for less.
Santa Cruz Properties is your #1 partner when it comes to owner financed property sales.
Santa Cruz Properties wants to make your dream a reality.
Our owner financing services means you don’t have to go through the stress and worries of trying to secure a bank loan. Plus, you’ll even save money and have an opportunity to have a say on the conditions of the promissory note.
Our company will help ensure that the legal aspects of the loan are properly in place. We will assess that the seller owns the land you are interested in, we will do title checks for liens against the property, and determine zoning.
At Santa Cruz Properties, your satisfaction is our priority.
If you need help starting the land-buying process, get in touch with us today at (956) 383-0868.