Myrtle Beach Owner Financing

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More Buyers

Owner financing can attract a wider range of potential buyers, including those who may have difficulty securing a traditional mortgage for issues other than debt income. For example, self-employed individuals often find it difficult to qualify for a conventional mortgage despite having the income and credit score necessary. Others may have had a foreclosure or bankruptcy that disqualifies them despite being back on their feet and meeting the down payment and income requirements. Investors with multiple properties often find it difficult to obtain another mortgage, even when they have sufficient asset equity and income.

Faster Sale

The availability of owner financing may expedite the sales process. Buyers can move forward more quickly without the need for a lengthy mortgage approval process. When interest rates are high, or the market is slow, offering financing at an attractive rate can also lead to a quicker sale.

Higher Sales Price

Sellers may be able to negotiate a higher sales price when they offer financing. You are providing a valuable service and may be able to garner a better price for the convenience.

Steady Income Stream

Monthly payments provide a steady passive income to sellers. If you need a reliable source of recurring income over time, owner financing may be a valid option for you.

Flexible Terms

You can negotiate the most favorable terms for both parties. The interest rate, repayment schedule, early pay off penalties and more are subject to negotiations. Every aspect of the note and mortgage can be tailored to benefit everyone involved

Tax Advantages

This is one of the biggest reasons to consider owner financing. You can avoid potentially large upfront capital gains taxes. By spreading the tax over time you can often lower overall tax payments.

Property Secures the Loan

Sellers have built in collateral for the loan, the property itself. Combined with a good down payment, the property provides you with additional security, further reducing your risk. In the event the buyer defaults, you have the ability to legally reclaim the property.

Handled by Attorneys

Owner financing is not a DIY (do-it-yourself) venture. The details and legal requirements of notes and mortgages are best handled by competent, experienced local attorneys.

Attorneys will prepare and record the promissory note and real estate mortgage documents. These documents will be very similar to those commonly used by commercial lenders (banks, savings and loan, etc.). They'll meet all state and federal requirements and guidelines. The attorney will ensure the documents contain provisions requiring the maintenance of adequate hazard insurance, a "due on sale" clause, the requirement for a reasonable late charge, the right of prepayment in whole or in part without penalty, appropriate provisions regarding acceleration of the loan balance and foreclosure in the event of a default by the Buyer, and a "right to cure" clause.

Please do not try to "roll your own" note and mortgage, nor download one from the internet. One tiny detail that does'n comply with your state's or federal laws could cost you tens to hundreds times more than the cost of using an attorney.

Sellers can also take advantage of third party mortgage servicing companies to escrow the payments and disburse the money to the appropriate recipients to avoid issues such as tax sales, gaps in insurance, and foreclosure.

Summary

Despite these advantages, it's important for sellers to carefully consider the risks and challenges associated with owner financing, such as the potential for buyer default and the need for legal and financial expertise to structure the agreement properly. Always consult a real estate attorney and professional financial advisor when considering owner financing.

If you're considering selling with owner financing as an option, use a Real Estate Agent who's familiar with and experienced in closing owner financed transactions.

(See Buying A Home with Seller Financing Above)