Has the thought of purchasing a house from a seller using home investors crossed your mind yet? If you’re thinking of choosing this type of funding, you need to acquaint yourself with the demerits of the entire process. Seller financing, also known to many as owner financing, has five disadvantages and this article will lay it all out there for you potential homeowners to prepare yourselves for what’s to come.
Once a house has been put on the market by a seller, the buyer comes up with a bank financing option. However, this can be avoided as the seller can in the same capacity act as the bank. This method of payment is owner financing. The home buyer has to keep paying monthly installments until he/she settles the debt in full.
A considerable large number of individuals opt for seller financing as it allows buyers to own homes they wouldn’t have otherwise been capable of owning due to financial constraints. On the dealer’s perspective, it offers a steady flow of income. That’s if the seller is okay not getting the whole amount at once from the sale.
But is everyone ideal with owner financing?
Let’s begin by listing the five disadvantages of buying a house through owner financing in Houston
One: Applicable Terms
When you make a comparison between bank funding and owner financing you’ll realize owner financing is more flexible than bank financing. However, this merit can immediately become a demerit because if you’re not familiar with all the terms and overlook some, you may create a situation that doesn’t favor you.
Two: Not Easily Acquired
Frankly, most people haven’t heard of this mode of funding. Most owners are only familiar with bank financing and therefore not aware of the perks that come with seller financing. The buyer might not have heard about it, and for this reason, it might not even make it to the table as an option. We Buy House Fast Houston, have owner financing options so if you ever think of buying using this option, feel free to come to our offices, and we’ll discuss our seller financing options.
Three: Limited Options
Finding an owner who’s ready and willing to work with seller financing is not easy at all. Consequently, you have limited options left regarding the houses that are available on the market for you to pick from if owner financing was your only option.
Or, it may also mean you have to look into more houses until you find that one seller that’s ready to work with your financing plan.
Four: Possibility of more Payment
With bank financing, the interest rates have already been agreed upon and signed. The bank directly sets the rates per the stipulations. You might end up paying more in owner financing because no regulations govern the seller. But to think of it, maybe it’s okay paying more for you to be able to get into a house you’d never have gotten into in any case.
Five: Unfamiliar Owner
Bank financing comes with a team of professionals who work within a code of conduct and industry regulations. With seller financing, you have to interact with a stranger you don’t know. Before making any move, be certain you’re completely on board with the individual lest you realize while already in too deep that you’ve made a colossal mistake.