| In simple terms owner financing means the seller | | | | Another advantage is in case a loan is acquired while |
| helping the purchaser to buy the house. The vendor | | | | under owner financing plan, refinancing could be done |
| can finance one part of the amount or at times even | | | | at any point of time without penalty; there is no need |
| the full amount based on the buyers requirement. This | | | | to wait till the last balloon payment date. |
| method is used when it is difficult to obtain a loan. | | | | A loan term can be extended, but an additional fee |
| Banks follow number of rules and regulations before | | | | should be paid to change terms. The contract can be |
| approving loans. The process is lengthy and time | | | | rewritten based on the down payment or equity. The |
| consuming. The banks are raising bars for loan eligibility | | | | repayments should be made without defaulting, to own |
| which is making it more difficult to acquire finance. | | | | the property at the end of the balloon date. A sincere |
| Owner financing comes to your rescue at these times. | | | | effort to purchase the house should be shown at the |
| Loans are rejected due to number of reasons. It may | | | | buyer’s end, only then owner financing works. |
| be due to lack of proper documentation, poor credit | | | | This is totally different from rent to own house |
| ratings, time constraints etc. Any of these can prove | | | | scheme. In a rent to own scheme the renter is |
| counterproductive while acquiring a loan. | | | | engaged for a stipulated period of time where at the |
| Owner financing helps unqualified buyers to get loans | | | | end of the term he has to acquire loans to buy the |
| to buy house. This involves comparatively less paper | | | | property, whereas in a owner financing scheme you |
| work then normal bankers. It is just a step forward to | | | | can become the owner of the house with the help of |
| assist buyers to possess the house fast. | | | | the seller who offers a finances. |
| Owner financing can be called Balloon Mortgage. The | | | | Benefits like tax breaks, equity building and other |
| major advantage of this type of loan is repayment | | | | financial profits are enjoyed only by house owners. |
| period can be extended as per the requirement of the | | | | Owner financing only can help get such gains. |
| borrower. The principal remains outstanding and has to | | | | Unlike banks owner financing is a highly flexible |
| be paid in lump sum. This whole sum at the time of | | | | scheme where the buyer’s terms can be |
| maturity is called balloon payment. | | | | entertained. The ultimate goal is to help the buyer and |
| The terms of the loan is provided in the contract. All | | | | free them of their financial burden. The loan period |
| details pertaining to the loan such as rate of interest, | | | | ranges from a minimum one year to a maximum of |
| balloon payment date and amount, loan terms, | | | | ten years. Though, this can be extended on the |
| instalments etc are mentioned in the deed. Instead of | | | | buyer’s request. |
| paying to the bank the amount is paid to the owner. | | | | |