It’s much more difficult for buyers to obtain a mortgage today than it was just a year ago. Lenders are requiring larger down payments and higher credit scores to finance homes and investment property. Given the relatively high home prices in Honolulu, an old concept is making a comeback and becoming more and more popular; owner financing. This concept may give home sellers an edge over their competition as it fully eliminates a large obstacle many buyers face today.
If you don’t need the proceeds from the sale of your home immediately, seller financing can be a great investment. Partial seller financing is also a possibility since most buyers will have a cap on their loan allowance. As the seller, you may finance the remainder at a higher interest rate than normal. Another benefit to consider with owner financing is the steady income you will receive from the monthly mortgage payments. Given the equity market volatility that we have been experiencing, this could become your one steady interest earner – perhaps 5-7% or more.
Owner financing is not without risk. There is always a chance the buyer may default on the loan. Should this happen, it’s possible you may reclaim the home through a legal process.**
Are you confused about the dynamic Honolulu real estate market? Is now the right time to sell? Do you want to explore your options? If so, contact Michael Zimmerman. In addition, check out the seller resources available on my web site.
** This post is provided for informational purposes. Please consult with your legal expert to be sure you fully understand all the risks associated with owner financing.
