The concept of owner financing is quite well known in Orlando investment property circles. In some cases, potential owners could look for full or part financing based on their specific needs. Sellers generally use owner financing to sell properties at a premium. They also require a mortgage on the property while doing owner financing. While it seems unbelievable that a seller would carry a mortgage, sometimes it is the only recourse. This is because rather than allowing a decline in the value of the property, they would want to facilitate sale by means of owner financing.
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When it comes to owner financing, various Orlando investment property types in terms of land and other types of real estate can be financed. This means that owner financing is not limited just to traditional homes. Owner financing is also common in situations where a property is in bad shape or else the property has not moved for some time in the property market. Seller financing which is also known as 'rent to own' is where the seller holds the note for you, without calling for any bank or credit checks. It is more commonly preferred by those who want to purchase investment property, rather than by homeowners as such.
In owner financing the seller is helped while steady cash flows are generated and one can set terms like interest rate as well as payment terms too. This is thus a way in which win/win is ensured for all the concerned parties to the deal. In many cases, people are wiling to have the seller of the potential investment property help with the finances, which means that the owner doubles up as the bank too. Terms and conditions are laid out and agreed upon. The buyer pays off the amount according to the terms of the deal without having to go to the bank. There is an option of varying the quantity of payments and this is duly mentioned in the terms and conditions of the contract.
When it comes to owner financing, the seller generally asks for a higher down payment than mortgage lenders. However, the interest rate would be lower than what a traditional lender would charge on typical property, where owner financing would come from an entrepreneur's savings.
Interest rates have spreads that are determined by financial institutions. Generally 1.50% to 2.50% over prime is the general interest rate with those who want lower rates being required to do a lot of research. This is not required in the case of owner financing. In a few rare cases, the owner financing may be even at 0% interest, especially in cases when the seller is very keen on selling the investment property urgently.
If you want to sell off your investment fast and also get a high rate for it, it makes sense to offer owner financing. You may also be able to get first mover advantage and better prices as owner financing makes your Orlando investment property much more attractive to prospective buyers. At the same time, it could also mean that your property is one of the first ones to get sold in the local property market. All of which makes owner financing a very advisable and popular proposition in times like these.
About the Author
Jack Chambers is a local resident in the Orlando area. He instructs people on Orlando vacation property while focusing on popular Orlando vacation areas.
by: Jack Chambers - Total views: 5 - Date: Tue, 26 Jan 2010
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