Article Views:
35
Ezine ready page
Ezine ready page
Posted on November 30, 1999 by Joy Stoyle | Posted under Finance
Owner Finance: When Home Owners Act Like Banks
|
This practice has certain advantages. One is that the owner can receive the money from the property sale over a longer period of time and get lower taxes on the money they receive. Plus, others may consider it a good idea to receive a monthly income from selling a property, then receiving all the money at once. Another incentive for doing so is the fact that, by lending the money, the owner has the right to collect interest from the money lent. This adds up to the monthly sum that the buyer already gives to the seller, which rounds up to a nice income. To ensure the security of the deal, homeowners that choose owner finance work with the services offered by a bank or another financial institution. This way, the money that the buyer has to pay each month are placed into an account open at a bank and the owner has the guarantee that they will receive the money. When the payments cease, an escrow officer will file a Quit Claim Deed, and the house will return to its former owner. Exactly like it happens when someone borrows money from a bank, not only the property is lost, but also all the money paid right until that moment. Properties are not exactly easy to sell. If an owner decides to carry a note, then more buyers will be interested, as those having all the money at once are but a few. When the owner of the house decides to lend a part of the money from the property, the deal is made easier for both parties. This also works when the buyer is not entitled to get a large loan from a bank and this represents a good opportunity to afford a home. The number of potential buyers is enlarged and the sellers have their peace of mind that they will have whom to sell their property. If the entire value of the house is financed by the owner, the buyer will not have to borrow any more money from a bank. This can translate in more advantageous rates for the buyer. Other additional costs are also waived, as banks have other costs involved when it comes to dealing with a mortgage. Several thousand dollars can be saved only like this. Market is the one factor that can influence such decisions. If buyers are scarce, then the owners are interested in making a more profitable deal for both sides. This way, they manage to increase the number of potential buyers and receive a better price for their property. About The Author: |
Tags:
