What is “Owner Will Carry” financing?

What is “Owner Will Carry” financing?

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Owner Carry Financing

Owners will finance

“Owner will carry” or “Owner carry back” refers to a type of financing in which the sellers or owners of the property act as a lender.  Buyers are provided with an opportunity to purchase without going through traditional institutions such as banks or brokers. This is a great option for those who have bad credit or cannot prove their income. Investors have used owner carry back loans for many years but because of bad credit due to the economy, foreclose, and stringent loan criteria, the market is starting to see a big jump in these types of carry back loans .

How it works

Sellers generally require a down payment. This can be as low as a few thousand dollars but in most cases at least 20% down. The term or amount of time is also flexible. A majority of carry back loans are financed for 2 to 7 years, then the payment is due in full. The seller will allow the buyer to refinance, get financing through another source, or sell the property. Interest rates will vary as well depending on the risk, length of term, and amount of the deposit. I have seen the rate as low as zero to as high as 18%.  From there all parties sign a contract of the terms and conditions.

Who can Benefit?

As I mentioned above, a portion of home buyers will benefit from owner carry financing but it certainly isn’t right for everyone. Investors looking for a short term loan to buy, fix, and flip homes may find this type of loan appealing. For someone who was affected by foreclosure or a short sale would certainly benefit. The self employed who have a difficult time proving what their income is or who do not want to hassle with paperwork would be interested. Let’s not forget about the good folks who fell on hard times and their credit was affected.  This is an opportunity for them to own again.

How do I find Owner Carry Back Loans?

The best resource to help you find homes that the owner will finance is from your local Realtor. Make sure that the real estate agent knows and specials in owner carry back loans. This way you will be properly represented and have your interests protected. Also be sure and check your state and local regulations  and laws.

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Categories: Current Real Estate News

Author:Jim Red

Jim is the Designated Broker for Lund Realty located in Glendale, AZ. Specializing in helping people find and sell homes. His off time is spent with his family, dogs, servicing the community, and traveling. See more at www.JimRedSellsHomes.com

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