Buying a House With Owner Financing

Many people that have either been turned down for traditional financing are turning to Rent to own or Owner Financing to buy a house these days. While the offers advertising the fact that “Bad Credit is OK” may be appealing. The motivation behind these offers often is not in the best interest of the people the customers that use it.

Let me explain. There are some easy ways to find out whether the person/company selling the house is interested in you actually owning the home or just making money off of you.

    1. If your credit is low, are they offering a service to help you build your credit or are they reporting your payment to the credit bureaus.

    1. If they aren’t, chances are they have locked you in a VERY high interest rate loan that you may never be able to refinance out of.

    1. Did they require a large down payment (5-10k) and above market payment for the house.

    1. This is sometimes done knowing full well that if you default they can keep your down payment, take back the house and sell it again.

  1. Have they set up a bank to refinance your owner financed loan once the seasoning period is over. Banks will only refinance a borrower who has owned a home for at least 6 months.

These are all reasons to be suspicious of the offer. So before you pursue owner financing or rent to own for the purchase of a house. Make sure you are not being set up for failure and you have a plan of action to get your credit in place to refinance the owner financed loan.