If you’re thinking about buying a house from a seller using seller financing (also called “owner financing”) make sure you’re aware of the advantages as the drawbacks! Keep reading this blog post to learn the 5 disadvantages of buying a home via owner financing in Milwaukee so you can be prepared
When a seller wants to sell their home in the zip code area, they could wait for buyers to come up with bank financing, but there’s another option as well: they can offer owner financing (also called “seller financing”) in which the seller acts as the bank. The buyer simply pays monthly payments to the seller until the house is paid off.
For many people, owner financing is an excellent alternative because it allows buyers to get into a home that they might not have the credit to purchase, plus it gives the seller a steady cash flow if they don’t want or need the large amount of money from the sale of the house.
But is owner financing right for everyone? It may not be.
5 Disadvantages Of Buying A Home Via Owner Financing In Milwaukee
#1. Harder to get
The most common way that a lot owners aren’t aware of when it comes to owner financing is the bank financing. (However, we do owner financing and it’s very common at our office so give us a call at (262) 288-0580 to talk to us about our owner financing options).
#2. Fewer options
Finding an owner who is willing to do owner financing isn’t an easy task. This means that you will have a smaller number of houses on the market that you can buy, or that you will have to spend more time finding the one which owner wants to sell via owner financing.
Owner financing comes with many more flexible terms than you might normally get at a bank. However, this can also be a disadvantage because if you are not familiar with the all the possibilities you may overlook a term or you may create a term that does not give you an advantage.
#4. You may pay more
With traditional bank financing, the interest rate is set by the bank. Owner financing may have higher interest rates (depending on the other terms of the contract) and you might end up paying more for the house. However, you might be fine paying more overall if it means you can get into a house that you couldn’t otherwise get into.
When you go with bank financing, you work with a bank which means you work with professionals who are bound by a code of conduct and industry regulations. When you choose owner financing, everything is based on the agreement, so you have to make sure that you have trust in the owner before you make an agreement with them.