Are you thinking about selling your property? If so, you may have come across ‘Owner Financing” (also referred to as Seller Financing). But, if you still have a mortgage on your house, you might be confused and wondering:
Can I do Owner Financing in Florida on a property with a mortgage?
At Sunshine State Buyers, we get homeowners calling and asking this question a lot! So, we decided a great place to post the answer would be here. Take a look below! We discuss this question and suggest strategies to help homeowners move forward.
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Your Available House Selling Options.
Various options are available to homeowners who are interested in selling their property. Below we mention some of the most common routes sellers take:
- Listing through an agent
- Listing without an agent
- Selling directly to a buyer
- Owner Financing
Many sellers are discovering a simple strategy called “Owner Financing” or “Seller Financing.” Seller financing allows homeowners to sell their Florida home to a buyer – as you would in any other deal – except you collect regular payments each month rather than a one-off sum. Here we break it down into three easy steps.
- The buyer makes a down payment
- The buyer continues to regular monthly payments
- When the agreed-upon price is met in full, ownership of the property transfers to the buyer
Both sellers and buyers alike love this route! It’s simple, effective, and a great way to sell or buy a house in Miami, Florida. Homeowners love it because it’s a terrific way to find more buyers and make their property available to honest homebuyers who may be unsuccessful when applying for a traditional bank loan. In the same way, homebuyers are opting for this strategy because it allows them more freedom, and they don’t have to take on the pressure and risk of a bank loan to purchase a family home.
How does it work?
If you own your house outright, you can do a straightforward Seller Financing agreement. But, what happens if you have a mortgage? Maybe you’re wondering, “Can I do owner financing in Florida if I have a mortgage on the property?”
The short answer: Yes… but it’s complicated.
Seller Financing with a Mortgage
Can I Do Owner Financing if I Have a Mortgage on the Property?
In some states, you can create something called a “wraparound mortgage.” This involves extending the mortgage to a buyer and usually occurs at a higher rate of interest than your mortgage since you’re still making loan repayments to the bank. However, this is not legally allowed in all states and all situations, plus there are additional clauses that you should be aware of.
When Seller Financing is not an Available Choice
If Seller Financing is not accessible to you because of a mortgage, there are other choices you can make.
An alternative strategy that can work for you is called ‘rent-to-own,’ which has some similar and not so similar features to Owner Financing. For instance, as the seller, you will receive on-going monthly payments, and you still retain ownership of the house. On the other hand, there might not be a down-payment up front, and the buyer will need to qualify for a mortgage from a bank at the end of the pre-established rental term.
If Owner Financing sounds like the choice for you, but you are still battling with a mortgage on your property, we have another excellent option for you to consider.
Get in touch and talk to us about your property and concerns. We are experts in buying and selling real estate, and we have years of experience supporting homeowners get out of tricky situations. We are aware of a variety of different options that you may not have heard of. We would be more than happy to walk you through your options and help you find the ideal solution. Alternatively, we can connect you with someone we know who can help.