be very careful

Owner finance is normally a very bad thing for seller. Who does not want to get paid cash all at once? Therefore, whoever offers owner finance usually does so because one of the following reason:

1) house price inflated. Only owner finance can attract buyer.

2) house cannot be sold otherwise because of depressed market.

3) The house was constructed or remodelled without permit.

4) The house was constructed against certain city code, or in violation of construction code.

Normally, you shall get SSN from the owner and you do get same interest deduction on your tax return. Closing cost and interest rate is subject to negotiation. If there is no skeleton in the closet, usually you get higher interest rate than bank interest rate.

Most owner finance are not 30-year fixed loan. Usually it is a 3-year or 5-year fixed interest only balloon. Meaning you must pay the entire loan off by the end of the 3 or 5 year period. If you don't have that much cash in your pocket by then, or being able to get a loan from any banks to pay it off, you will lose the property to foreclosure. Many owner finance ends up in foreclosure. Actually I have heard some seller would be happy to offer balloon type owner finance with a big down payment to buyer, only with intention to set buyer in the trap and rip you off by the end of the loan period. Thinking you can refinance in 5 years? Better think again, you never know what the bank policy will be by then.

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• thanks very much for the caution. -jjj7- ♂ (53 bytes) () 11/28/2011 postreply 12:10:03