Definition of Owner Financing:
Owner Financing in Orange County, Ca:
Owner financing occurs when a property buyer finances the purchase directly through the person or entity selling the Orange County home. This often occurs when the prospective buyer cannot obtain funding through a traditional mortgage lender, or if the homeowner owns the property free and clear. The seller may also agree to owner financing if he or she is having difficulty selling the property, again this is usually only going to happen if they own the property free of liens. This is also known as "creative financing" or "seller financing".
Owner financing is most-common in a buyer's market. In order to protect his or her own interests, the seller may require a higher down payment than a mortgage lender would. Down payments of 40% or more are not uncommon in owner financing. The deed to the property is usually not transferred to the buyer until all of the payments have been made, but because no institutional lenders are involved, the overall terms of financing are much more negotiable, and can be set up to provide benefits to both the seller and the buyer. The buyer saves on points and closing costs, while the seller can obtain monthly cash flows that provide a better return than fixed-income investments.