What Is Owner Financing? A Complete Overview for Texas Property Owners
Owner financing, sometimes called “seller financing,” is a method of buying and selling real estate without traditional bank loans. Instead, the seller finances the purchase directly for the buyer, allowing both parties to customize terms and close the deal more quickly.
Why Choose Owner Financing?
- Faster Closings: No need to wait for bank underwriting.
- Flexibility: Buyers and sellers can negotiate terms directly.
- Investment Opportunity: Sellers often receive higher returns than from a lump-sum sale.
- Access for Credit-Challenged Buyers: Useful when traditional financing isn’t available.
How It Works in Texas
In Texas, owner financing is legal but subject to important restrictions, especially after the passage of the Dodd-Frank Act and revisions to the Texas Property Code. Contracts must be clearly written, disclosures made, and in some cases, the seller must comply with mortgage loan originator rules.
At Guerra Days Law Group, we help both buyers and sellers navigate this complex area of real estate law.
Owner Financing vs. Traditional Financing
| Owner Financing | Traditional Bank Loan |
|---|---|
| No bank approval required | Subject to strict lending rules |
| Flexible payment terms | Standardized by lender |
| Private contract | Public loan underwriting |
Is It Right for You?
If you’re a seller looking for long-term income or a buyer unable to qualify for conventional financing, this option might be ideal—but it must be done right to avoid legal and financial risks.
Coming Up: Learn about Texas legal requirements for owner financing in Page 2 of this series.
Need personalized guidance? Contact Guerra Days Law Group today to schedule a consultation.