Do you onwn a house that needs to be sold? Or maybe you are thinking about selling and maybe you have heard of seller financing may think thats right for you? What if you still have a mortgage on your house? You may be wondering “Can I do owner financing in Spokane Wa if i have a mortgage on the property?” We get this question a lot so we decided to answer that here…In this blog post we are going to deep dive this subject and we will answer that question as well as discuss some strategies to move forward.
Here Are Some Options You Have
Homeowners who are thinking about selling have a few options. They can list their home through an agent, or they can list it themselves, or they can sell directly to a cash buyer. Also many homeowners are discovering a simple strategy called “seller financing” or “owner financing” that will allow them to sell their home to a buyer and collect regular payments with interest to pay off the house:
- When the agreed-upon price is paid, the title reverts to the buyer
- The buyer pays a down payment
- The buyer pays regular monthly payments with interest
Homeowners love this strategy because it is a fantastic way to sell and a great way to find even more buyers that cant get a traditional loan from a bank. Home buyers love it because it means more choices for them and they do not have to necessarily impact their credit score to get a house.
If you own your house and have no loan on it, you can do a seller financing agreement. But what happens if you have a mortgage? Maybe you’re wondering, “Can I do owner financing in Wa if I have a mortgage on the property?”
The answer is: it is complicated.
Seller financing with a mortgage
In some states, you can create something called a “wraparound mortgage” in which you extend a mortgage to a buyer who will assume the loan(usually at a higher interest rate) while still paying your own mortgage to the bank. However, this is not exactly legal in every state and there are additional clauses that you should be aware of.
Can I Do Owner Financing if I Have a Mortgage on the Property? – You have a few choices
If you’re unable to sell with seller financing because of a mortgage, there are other options…
An alternative that might work for you is called rent-to-own or also called lease option, which has some similarities (such as ongoing payment and you own the house) and some differences (there might not be a down-payment and the buyer needs to qualify for a mortgage from a bank so they can refinance at the end of the agreed upon rental term). This rental term can be anywhere between 2 to 10 years bepending on how long you decide.
If you are thinking about owner financing but you still have a mortgage on your property, here is another option for you: Get in touch with us and talk to us about your property. As experts in selling and buying real estate, we are aware of a number of options that you may not know about. We can walk you through these options and help you out or we can connect you with someone who can help you.