San Antonio Owner Financing Attorney
One of the largest single investments a person ever makes is purchasing a home. Most homeowners need some form of financing due to the high cost involved with purchasing real estate, such as traditional bank financing from a bank or owner financing. Owner financing does not involve conventional mortgage lenders or banks but allows home buyers to finance the purchase directly through the seller. The San Antonio owner finance attorneys at Guerra | Days Law Group are here to help you from start to finish.
Buyer’s obligations and how owner finance works
In owner financing, the seller doesn’t hand over any funds to the buyer as a mortgage lender or bank would. Instead, the seller extends enough credit to the buyer like a mortgage bank would to cover the purchase price of the home and then the buyer makes regular monthly payments until the amount is paid in full.
To secure the buyer’s obligation, the seller requires the buyer to sign a promissory note to the seller. Promissory notes not only secure the buyer’s obligation to pay the seller, but also delineate the terms of the loan, including the interest rate, schedule of repayment, and the consequences of default.
Typically, the buyer obtains title a.k.a deed to the property once the proper documentation is complete. In Texas, a buyer obtains title to the property once the seller executes a form of Deed wherein the buyer is listed as grantee of the purchase property.
Whether you need us to prepare owner finance documentation from scratch or review documents the other party has already provided, Guerra | Days’ San Antonio owner finance attorneys are here to help you every step of the way.
Advantages of owner financing:
Owner financing can be an alternative option for both parties in a real estate transaction.
Advantages for buyers:
- Quicker closing: No waiting for the bank loan officer, formal underwriting, and legal department to process and approve the application.
- Less closing costs: No bank fees or appraisal costs.
- Negotiable down payment: No bank or government-required minimums.
- An alternative option for buyers who are not able to secure a mortgage.
Advantages for sellers:
- Able to sell “as is”: Potential to sell without making costly repairs that traditional lenders might require.
- A good investment: Potential to get a better rate of return on the money you raised from selling your home than you would from investing that sum other ways.
- Lump-sum option: The promissory note can be sold to an investor, providing you with a lump-sum payment before the repayment term ends.
- Retain title: If the buyer defaults, you have the ability to foreclose, you keep the down payment, any money that was paid, plus potentially the house.
- Sell quicker: Potential to sell and close faster since buyers avoid the lengthy mortgage process.
Just as there are advantages and benefits in owner finance, there are some disadvantages purchasers and sellers need to be made aware of. Don’t hesitate to contact a San Antonio owner financing attorney at the Guerra | Days Law Group to answer any questions as well as drafting the appropriate documentation.