Here is how owner financing works. The seller and the buyer agree to the terms of the contract and sign a written document. The terms of interest must be specifically agreed upon, and are required to be put in writing. The buyer and the current owner sign a 'contract for deed' but the title does not pass to the buyer until the final payment has been made or the agreement is refinanced. The written document is witnessed by a Notary Public or an Attorney and filed at the local county courthouse. This makes both parties covered by a legal binding contract and they must adhere to the terms of the contract. The buyer then has equitable title to the property and becomes directly responsible for paying the homeowner's insurance, taxes and all other related home ownership expenses or fees.

The seller will finance the purchase until the full amount is paid off. The legal title for the property does not pass to the buyer until the final payment has been made or the agreement is refinanced. The buyer will pay a monthly payment for a set amount of time to the seller or an escrow company instead of a bank. Default rules apply in an owner financing arrangement, just as they would at the bank. There is a clause in the written contract to address the issue of payment dates, late fees and defaults.

The seller has legal title to the property as security for payment. The buyer has equitable title to the property which gives the buyer the right to live in the property, improve it, rent it and otherwise enjoy all of the benefits of ownership. When the buyer pays the full amount due under the contract the seller delivers legal title to the buyer.

Lease Option may be best alternative for you, if you have very little to put down on your new home. We offer flexible terms such as Leasing with the Option to Purchase. This will give you time to save up a reasonable down payment. This option typically takes a year or two; after which we will owner finance the home for you. Lease option describes the process whereby you are only buying the right to buy the home at some time in the future at a set sales price. With a lease option you are under no legal obligation to buy the property or exercise your purchase option, if you determine that doing so is not in your best interest.

A non-refundable Option Fee locks in the purchase price. The Option Fee will be credited back to you upon execution of the Option to Purchase.

A lease option can also include a Rent Credit feature. This is comparable to the principle payment on a traditional home mortgage. Every month that you pay the rent credit, that amount gets credited against the final purchase price of the home. The Final Purchase Price for the lease option is the amount that you agree to purchase the property for at the end of the option contract. When you purchase the home, you will be credited with your option fee, and any applicable rent credits. These will be applied agains the final purchase price, reducing the amount of the final purchase price by your credits.