One of the most popular avenues for financing home purchases has become owner financing mortgages. There are many people in Canada who have the means to afford a home but have no access to funding through traditional sources such as banks. Even though they have put away a sizable down payment; either past credit problems, verifiable income, self-employment may be an obstacle. This is why owner financing mortgages have become popular. It gives sellers the chance to make a fair profit on the sale of their home, in the form of regular monthly interest and principal payments that is higher than what banks can provide on guaranteed investments. It also provides buyers another way to own a home.
How to Owner Finance a Home
At Amansad Financial, our Private Mortgage & Seller Finance Blend program help you navigate the financing once you have selected a property in which the property owner is prepared to facilitate a Seller Finance. We can assist in determining the terms of the owner financing mortgage contract. No matter where you are in BC, Alberta, Saskatchewan, Manitoba or Ontario, we can likely assist with putting the financing together. Urban markets are preferred, but any property for sale has the potential to become a owner finance property. In many cases, the seller has not considered the possibility. If the seller owns the house free and clear, the process is relatively simple to carry out. However, if there is an existing mortgage on the property, things become a little more complicated, but it still possible.
How to Start Seller Financing
If you are wondering How to Do Seller Financing and are interested in purchasing a house, the first step is to get pre-qualified for a private mortgage. You are likely to need a 10 percent down payment, although 5 percent is enough in some cases (this depends on the seller). However, the more you are able to put down, the higher the likelihood of success.
Once you have the pre-qualified, the process is quite similar to going through a bank. Find the house that you want to purchase, and then approach the seller with your offer. If you have engaged the representation services of a realtor, then that’s how you would advance your offer. If the home is listed as for sale by owner, hire a lawyer to draft the purchase agreement. You want protection with your purchase, and hiring a lawyer provides that peace of mind. Amansad Financial assists with the preparation of the mortgage only. It does not manage the administration of the rest of the sale.
Steps to Finalize Your Seller Financing
Before finalizing the seller finance, an appraisal will be required. The appraisal takes place at your expense, which is customary, even with a traditional lender. We recommend that you engage a home inspector to give the property a once-over. A home inspection provides you some protection from problems in the home that you may not be qualified to see. Issues such as black mold growing in the home’s inner structure or problems with the plumbing or wiring are likely to be beyond your expertise. However, once you move in, these can be issues that are prohibitively expensive to repair. Request for repairs to be a condition of the sale. Alternatively, reduce your offer to cover the the expenses you will incur to repair yourself.
If this sounds like a process which would benefit you, contact Amansad Financial today. Before you sign another year’s lease and throw 12 more months of rent down the drain, let’s determine if Owner Financing may be an option for you. We have helped many customers in similar spots and look forward to working with you as well.