Mortgage Monday: Owner Financing

Owner Financing

Owner Financing is once again becoming popular across several markets hit hard by the financial crises. Not since the 1980s, when interest rates were 18%, has owner financing been so popular. With the tightening of lending standards and the large number of foreclosures, the pool of credit-worthy buyers has diminished in some markets such as Michigan. Owner financing has become a way for some buyers to be able to buy a home that they can afford. Michigan leads the U.S. with about 1,600 listings advertising owner financing.

Last year some 52,000 homes were sold with owner financing, up 56% over the year before. Owner Financing accounted for 1.5% of all transactions in the U.S.

Land contracts seem to be the most popular form of owner financing. With a land contract, the buyer takes immediate possession of the property and the owner retains title until the loan amount is paid in full, at which time the title is then transferred to the buyer.

 


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