Austin Owner Financing is Better Than Renting to Own

Given the economy, banks have made it much harder to seek financing for Austin homes. As such owner financed homes have become much more popular. If you’re having trouble securing financing for your home, consider looking for seller financed homes as an alternative. Continue reading to find out more about owner financing and why it may be right for you.

What Are Owner Financed Homes?

Owner financed homes are those you can purchase without the help of a traditional lender. It means a homeowner has elected to take on the duties of financing your purchase. For the most part, the actual process is very similar to purchasing a home with a bank loan. (i.e. you make a down payment, you pay monthly, close at title company, there’s a promissory note, etc.).

Why Rent to Own?

Since the housing market crash, stricter guidelines have been put in place to make it harder for borrowers to secure home loans. These guidelines were made with the best of intentions, of course. They idea is that they will stop people from getting loans who have bad credit. Home loans won’t be an option for people without sufficient income and near perfect credit. There are dozens of other reasons as well.

An alternative to people who can’t receive financing from traditional lenders is to rent to own a home in Austin. In simplest terms, it means you rent a home for a certain period of time, but at any time you can elect to purchase it for a fixed sum. Of course, like with any rental agreement, you can choose to walk away at any time. However, there are strict policies in Texas regarding rent to own and lease option transactions. Folks who are looking to enter in to one of these agreements should first consult a licensed Texas real estate attorney.

Owner Finance and Rent to Own Similarities

As you can probably tell, both options have different characteristics in common. They both allow someone to purchase the home without the help of a traditional lender. Both involve working with the actual homeowner, even after moving in. Generally, both often have a future date when home ownership is expected to change hands. With rent to own, it comes at the end of the rental period (if the buyer so chooses). On the other hand, with owner financing, ownership takes place immediately at closing. The seller financed term is generally 5 to 10 years, at which time the buyer can refinance with a traditional bank.

Why You Should Choose Owner Financed Homes

Both options have positives and negatives associated with them and it’s always best to seek the help of a financial expert who can look at your unique scenario. However, many will recommend you seek someone offering owner financing. Even though the option is very similar to renting to own, you actually become the homeowner when you close on the home. This means if you choose to return to traditional lending in the future in order to refinance your home, you can so as you are considered the legal homeowner.

Expect owner financing to keep growing in popularity as the economy continues to struggle. Despite banks’ restrictions, Austinites will continue to need homes, after all. If you find yourself unable to get traditional financing, rent to own is still a great option if you utilize the expertise of a real estate attorney to ensure the transaction is structured legally and safely. But if you can find a home that comes with owner financing, that method is ideal.

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