Rent to own vs. Owner financing

Sell your house owner finance

Rent to own vs. Owner financing

In our last post, we talked about selling your house in Georgia rent-to-own. We have also posted blogs about owner financing. So, what is the difference and IS there a difference. Yes, and here it is…

Sell your house fast with owner financing

Straight to the point, selling your house fast with owner financing means “being the bank” instead of asking your buyer to go to a bank and bring back pile of cash to you for your house.

Being the bank allows you to receive income for the equity in your house, traditionally with interest, over time. Now that you are the lender, you don’t have the headache of maintaining the house. It’s their house now, you just hold the note (in layman’s term, an IOU secured by the house).

Everyone asks the same question right here, “what if they tear up the house and don’t pay?”. If they don’t pay by the terms of the mortgage or Georgia state law, call the attorney and start the foreclosure. You never have to leave your house. Simple.

The process of selling your house with owner financing

With selling your house under owner financing, you are simply doing a trade. You are giving them a house in exchange for a promise to pay (remember the IOU?). Don’t sound surprised, that is what a note (mortgage) is, a document declaring a promise to pay over time. All those papers you signed when you bought your last house with a bank loan is the same thing. You gave them a glorified promise to pay them (x dollars per month at x% for x number of months, etc., etc.)

Of course, there will also be a security instrument that allows you to take back the house if they don’t perform as agreed (security deed, deed of trust, etc.).

Selling your house rent-to-own

If the house you are selling still has liens attached, it can be tricky to sell with owner financing. That requires more formal training, I’m not willing to give away here, Sorry.

This is where rent to own agreements come in. The house you are selling may have other liens that need to be paid off before you can sell your house, but that doesn’t mean you have to sell your house for all cash now.

Rent-to-own financing allows the buyer to get control of the house they want now, while they work on getting the financing to buy the house later. Yes, they are your tenant for a time, but again, they intend on buying the house, so they are not likely to hurt it.

The main difference in rent to own financing is that you keep the house until the buyer get a bank loan to pay you off, then you do a standard closing. Your buyer should be working with a loan company to get qualified to buy your house, but until then, the house stays in your name.

Either way, selling your house rent-to-own or owner financing will both require you to screen your buyers, BUT, you will have a lot more buyers to choose from. Remember, you are dealing with buyers, not tenants. Most homeowners take better care of their house than tenants, but they do need to be financially stable enough to make the monthly payments.

If you need more information on this kind of real estate selling, go to our real estate blog page.

Good Luck

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