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In today’s tough market, even well-priced homes are staying listed for months. Desperate sellers continue to lower prices, but with no success. Even with affordability at an all-time high, buyers are hesitant due to the instability of the overall economy. For those who are willing to buy, getting approved for a loan can be another roadblock to overcome. It’s times like these where inventive and highly-risky options are ready to be considered.

Jonathan Osman explains why owner financing can be a win-win situation:

“Essentially, in owner financing, you, the seller, are acting as the bank for the buyer. They qualify based on your criteria, pay you a mortgage every month, and they own the house. Much like the bank, if they are late on a mortgage payment, you can foreclose based on the terms of the mortgage and when they sell it, they will pay you the balance. While it is risky and isn’t for everyone, it can be extremely profitable and an excellent source of income through the interest paid on the loan. Most people never consider why a bank would ever consider lending money to someone who couldn’t pay it back. However, all one needs to do is to pull up an amortization chart to realize the profit involved in mortgages. For an example, take a $200,000 mortgage at a 5.5 percent interest rate. In the first year, the buyer has paid the seller $10,932.72 in interest and only $2694.20 in principal.”

Prospective buyers are not qualifying for loans for a variety of reasons, most of which are the result of the recent tightening of the lending guidelines.

If a seller needs to sell a property and is not risk averse, owner financing may be a way for the both properties to come out ahead.

http://www.AustinOwnerFinancedHomes.com

http://www.GreatHomesTexas.com