If you feel that renting a home for the rest of your life is a great choice, think again. This is understandable, especially if you’ve just started living by yourself or you’ve just married and are about to start a family. Nonetheless, it will only be a matter of time before you will find out that renting is actually spending money without really having anything entitled to you in the end. Adding up the monthly rent you have paid will certainly highlight to you that you could have bought a home with it, one that you can really call your own.

Of course, you can complain about the fact that homes nowadays have prices that are above your average income. Therefore, you have to save a lot of money first before realizing your plans of buying a home that will really become your own. In order to avoid this trouble, you may as well try flexible payment methods such as owner finance. Under this arrangement, you have to bear with the fact that the price can be dictated by the owner alone. However, this should not be too expensive and is certainly better than paying for a home that you will never own.

Therefore, you can already redo some parts depending on your wish. You can renovate or repair certain portions so that the house will really live up to its purpose of providing you comfort and convenience. You’re certainly not allowed to do this with your rented unit.

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The current mortgage lending and real estate debacle has created a huge boom in the private mortgage note business (Mortgage Notes created as a result of owner financing). Anxious home owners are increasingly becoming the mortgage lender by necessity as lending institutions have moved to the other extreme in mortgage lending practices. In the sub-prime days, mortgage companies would give you a mortgage, in many cases for 100% of the home’s value if you simply had a pulse. Now, with the exception of government backed mortgages (FHA, VA, USDA), you will need twenty percent down, almost pristine credit and 100% documentable income via federal tax returns. Unfortunately, these very tight lending practices have left many very good, low risk home buying prospects out of the market. This is particularly true for millions of self-employed homebuyers who often have plenty of cash for a down payment ansd good credit. These homebuyers simply may not be showing a lot of taxable income so as to keep their taxes to a minimum. Their aggressive tax strategy means they can’t get a a home loan. As a result, the home seller needs to step in to save the day.

Now, I realize that every homeowner may not have this option, but it could be a great alternative for a lot of home sellers. {It is a great option for homeowners who have some equity in the property as opposed to those where the mortgage is equal to or greater than the value of the home.|It will work best for homeowners that have a lot of equity in their home where as it won’t work for people with little to no equity.} Interestingly, a lot of home sellers are not even aware that it’s possible to sell this owner financed note, which is a highly valued marketable financial instrument. They can even sell their private note to a mortgage buyer (also known as a note buyer) within a few months after closing when the note accrues a little “seasoning’. Many note buyers will be willing to convert the mortgage into a lump sum of cash. This essentially gets the seller an all cash deal and although the homeowner takes a discount on the private mortgage to sell it (a dollar today is of more value than a dollar tomorrow), the result is it moves the home quickly, usually fetches top dollar and the property can usually be sold without any sales commission. The net result is almost always win for both the seller and buyer.

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In today’s real estate market you hear owner financing a lot, much more than years past. That is because sellers, who need to sell, are not finding the buyers that will qualify for a bank loan and cash them out. It is a viable avenue for sellers who need to sell quickly but can wait for their money.

But what is it exactly and how does it work? And how can I do it? Seller financing is where the owner of a property agrees to lend his equity in a property to a buyer for the purchase of the home. It is just like a bank loan but the seller is lending the equity they have in the house not paper money. The title company will handle the paperwork just like a loan from a bank without the money transfer.

The title company will prepare a promissory note that states the loan amount, term of the note (length of loan), the interest rate and payments & their due date. All these factors are negotiated between the buyer and seller. A deed of trust or mortgage, depending on which state you are in, will also be prepared. The Title Company or lawyer doing the closing records these documents at the county clerk’s office.

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