Owner Financing | 4 Advantages for the Buyer
Now that we have talked about Owner Financing Advantages for the Seller, let’s talk about Owner Financing Advantages for the Buyer.
Despite the possibility of an elevated purchase price and higher interest rate, there are many advantages to a buyer who engages in privately financed transaction.
4 Advantages for the Buyer
1. Easy Qualification. The buyer, in many cases, prefers a privately financed transaction to conventional financing because it does not require traditional bank income and credit approval. The buyer may have poor credit because of a divorce or recent bankruptcy. He may be self-employed and cannot prove income. He may be new to his job and cannot meet strict lender guidelines.
As you can see, there are dozens of reasons why a buyer cannot (or will not) qualify for a conventional bank loan. The privately financed transaction becomes the perfect solution for him.
2. Fast Closing. Often a buyer can close and move into a property within days, since there is no third party lender.
3. Low Loan Costs. One of the biggest benefits for the buyer is the ability to avoid much of the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, etc. charged by conventional lenders can amount to thousands of dollars at closing. The buyer may be free from much these expenses with owner financing and hard money lending.
4. Credit Rating. An installment sale may give the buyer a chance to improve his credit rating by owning a home and making payments timely.
In summary, we appreciate the lenders who work hard to provide loan products for a variety of individuals with a verity of needs, however there are many individuals and transactions which cannot fit into any loan product available today. For those individuals and transactions, owner financing and hard money lending may be the key to unlock what otherwise would be a dead deal.
by: Robert A. Ballinger, Attorney at Law
Read Part 1 here: Owner Financing | A More Viable Investment Strategy
Read Part 2 here: Owner Financing | 4 Advantages for the Seller