We get the question a lot about Owner Financing " How does it work?" Well let's give you an example.
Say you want to retire in Colville in 5 years, but don't want to buy a house. A lot of buyers try to find the perfect piece of property and build a home when they retire. Unless they can pay cash for the property this can be a problem, as banks do not like to lend money for raw land. This is where Owner Financing comes into play, the seller plays the bank. Say the buyer and seller have agreed on a 100K sale price. The seller asks for 35% down ($35,000) with an interest rate of 8% amortized over 30 years. This would make the buyers payments about $477.000 per month.
The seller not being a true bank is not wanting to carry the loan for 30 years, so he asks for a 5 year balloon payment or cash out. This means the buyer will have to refinance the property with another lender or pay the balance off after 5 years.
If you have additional questions on Owner Financing please let us know. We would happy to answer them for you!
Len & Carol