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Is Owner Financing Your Home the Smartest Move?

May 28, 2025 by Kay Monigold

Owner Financing Your Home Deciding to sell your home can feel overwhelming, especially when you want to maximize profit and close quickly. One strategy gaining popularity is owner financing (also known as seller financing). But is it right for you? Let’s discuss how it works, when to consider it, and the key factors every seller should weigh.

Why Buyers Ask for Owner Financing

Most buyers secure a mortgage through a bank or credit union. When a prospective purchaser requests you to carry their loan, ask yourself:

  • Credit Constraints: Do they lack sufficient credit history or have a low credit score?
  • Down Payment Challenges: Are they unable to come up with the typical 10–20% down payment?
  • Unique Loan Needs: Are they self-employed, retired, or otherwise outside conventional underwriting guidelines?

If a buyer can’t obtain traditional financing, owner financing may open the door to more offers and potentially at a higher interest rate.

Evaluating Your Risk

Before you agree to seller financing, get crystal clear on your own financial standing:

  1. Existing Mortgage Payoff
    Unless you own the property outright, you must pay off any outstanding mortgage when the sale closes. If you cannot and don’t have enough in reserves, you may not be able to extend the financing.
  2. Monthly Cash Flow
    In the event of default, can you afford the monthly payment on your former home? Ensure you have a plan (or an escrow cushion) to cover the mortgage if you need to reacquire the property.
  3. Interest & Terms
    Seller financing typically commands a higher interest rate than a bank loan. This can boost your long-term returns, but be sure to set clear amortization schedules, late-payment penalties, and balloon payment dates.

Structuring a Win-Win Deal

If you own your home free and clear, you have more flexibility:

  • Partial Financing: Offer to carry 20–30% of the purchase price, with the buyer obtaining a conventional loan for the remainder. After 12–24 months of on-time payments, they can refinance the balance and send you a lump-sum payoff.
  • Full Financing: You act as the bank for the entire sale price. The buyer makes monthly payments (with interest) to you directly. This creates a passive income stream but requires careful vetting and clear contractual terms.

Always work with a skilled real estate attorney to draft a compliant promissory note and mortgage (or deed of trust). A professional agent can help screen buyers, verify incomes, and coordinate appraisals.

Benefits & Risks at a Glance

Benefits

  • Faster sale in a slow market
  • Potentially higher interest income
  • Access to a wider pool of buyers
  • Reduced carrying costs if you’ve paid off

Risks

  • Responsibility for property upkeep
  • Complexity of loan servicing
  • Buyer default leading to foreclosure
  • Responsibility for property upkeep

Owner financing isn’t for every seller, but for the right situation, it can be a powerful tool to accelerate your sale and increase profits. Do your homework:

  1. Crunch your numbers: payoff, reserves, and projected returns.
  2. Consult a real estate attorney to draft airtight documents.
  3. Partner with an experienced agent to market and screen buyers.

Let’s discuss whether seller financing aligns with your goals and structure a deal that works for you and your buyer. Reach out today and unlock a smarter way to sell your home!

Filed Under: Home Selling Tips Tagged With: Owner Financing, Real Estate Advice, Seller Financing

What’s Ahead For Mortgage Rates This Week – May 27th, 2025

May 27, 2025 by Kay Monigold

Despite the recent pause on tariffs for Europe and progressing talks with China, the economic outlook remains largely negative across all sectors and markets. Although this week was relatively light on economic reports, the most notable was the Leading Economic Indicators, which showed a significant decline in every measurable category for April. This decline is largely attributed to the tariff policies implemented recently. Overall, the outlook remains pessimistic, despite other markets showing a more favorable reaction to the recent pauses on tariffs.

U.S. Leading Economic Indicators

The Conference Board Leading Economic Index (LEI) for the US fell sharply by 1.0% in April 2025 to 99.4 (2016=100), after declining by 0.8% in March (revised downward from the -0.7% originally reported). The LEI declined by 2.0% in the six-month period ending April 2025, the same rate of decline as over the previous six months (April–October 2024).

“The U.S. LEI registered its largest monthly decline since March 2023, when many feared the US was headed into recession, which did not ultimately materialize,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Most components of the index deteriorated. Notably, consumers’ expectations have become continuously more pessimistic each month since January 2025, while the contribution of building permits and average working hours in manufacturing turned negative in April.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.09% for this week, with the current rate at 6.01%
• 30-Yr FRM rates saw an increase of 0.05% for this week, with the current rate at 6.86%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.18% for this week. Current rates at 6.53%
• 30-Yr VA rates saw an increase of 0.17% for this week. Current rates at 6.54%

Jobless Claims

Initial Claims were reported to be 227,000 compared to the expected claims of 230,000. The prior week landed at 229,000.

What’s Ahead

PCE Index data release, the Federal Reserve’s inflation indicator, the FOMC minutes giving us forward guidance for the Federal Reserve’s policy, and Univ. of Michigan Consumer Sentiment will be the most impactful releases of next week.

Filed Under: Financial Reports Tagged With: Financial Report, Jobless Claims, Mortgage Rates

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Our Team

Kay MonigoldKay Monigold
Owner/Mortgage Broker/Residential Mortgage Loan Originator
NMLS#1086176

Ron MartinRon Martin
Residential Mortgage Loan Originator

NMLS#316821

Steven LoweSteven P Lowe, Sr
Residential Mortgage Loan Originator
NMLS #1085638

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