Do you have a house to sell? Maybe you’re considering selling, and maybe you’re considering seller financing. If your house has a mortgage, you may be wondering, “Can I do owner financing in LA if i have a mortgage on the property?” We get this question a lot, so we decided to write about it. Keep reading for answers and some strategies for moving forward.
You have options
Homeowners have several options when selling their home. They can list it through an agent, list it themselves, or they can sell directly to a buyer. Many homeowners are learning about a simple strategy called “owner financing” or “seller financing”. This allows them to sell to a buyer while collecting regular payments to pay off the house:
- The buyer pays a down payment
- The buyer pays regular monthly payments
- When the agreed-upon price is paid, the title reverts to the buyer
Homeowners love it because it’s a great way to find more buyers – including those who may not be able to get traditional bank financing. Home buyers love it because it means more choices for them, and they don’t necessarily have to impact their credit score to get a house.
If you own your house outright, 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 LA if I have a mortgage on the property?”
The short answer is: it’s complicated.
Seller financing with a mortgage
Depending on your state, you can do something called a “wrap-around mortgage”, in which you extend a mortgage to a buyer (usually at a higher rate of interest) while still paying your own mortgage to the bank. This is not legal in all states or situations, 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 choices
If you can’t do seller financing because of a mortgage, you have other options.
An alternative that may work for you is called rent-to-own, which has some similarities (such as ongoing payment and you own the house) and some differences (there may not be a down-payment and the buyer needs to qualify for a mortgage from a bank at the end of the pre-established rental term).
If you are thinking about accepting owner financing, but you still have a mortgage on your property, here’s another option for you: Get in touch with us and talk to us about your property. As experts in buying and selling real estate, we are aware of a number of options that you may not know about. We can walk you through those options and help you ourselves, or we can connect you with someone else who can help you.