Traditional Owner Financing Verses Our Financing
When financing any item, it is the convenience you are paying for. You want an item now, but you don’t have the cash to buy it now. You would have to save half a lifetime to come up with the cash to buy a house out right. Who does that?
Leverage is using Other People’s Money or (OPM) to obtain what you want today without having to come out of pocket today. Leverage is the ability to control a property (in this case) with little of your own money.
You don’t walk into a car dealership and plop down $25,000 on the new car you want and walk out. No, you put down a few thousand and pay over time. You are now driving that $25,000 car and you didn’t have to pay today. Of course the bank makes money over time by charging you interest on the money they lent you. They are getting paid for letting you have what you want today.
If you have a high credit score and you have a good paying job and your debt to income ratio is aligned with the heavens and you only make pancakes on Tuesday while driving your boat backwards you may qualify for the advertised specials. Those deals go to the people who don’t need the help. You get the deal that takes the most money out of your pocket at the most insane 25% interest rate.
TRADITIONAL OWNER FINANCING
The average way a person offers his home through owner financing is pretty rough on the buyer. The first thing they want from you is a credit check, background check and a $100, non-refundable application fee to pay for those checks they do. Now if you qualify you may proceed. To start they want 20% down, just like a bank.
I will take the average cost of the homes I have on my website. $65,000 X 20% = $13,000. Do you have an extra $13,000 sitting around? If you are anything like most of the people I talk with the answer is “Hell No”.
Wait, It gets worse. In 5 years you must pay the balance owed in full. That means you either have to have the remaining $40,000 in cash or you have to have your credit repaired by that point so you can refinance the house and pay the man off. Now you have a new 30 year mortgage and get to start all over again. Oh goodie! Not to mention the closing costs at the time of original purchase and refinancing. This is several thousands more.
This way is far too rough on the buyer. You.
For $2,000 out of your pocket (Immediate savings of $11,000) you now have control of a home. There are no closing costs.
Monthly payments average from $450 to $650 a month over a period of 30 years.
This is maximum leverage. Little out of pocket up front and little out of pocket each month. We have now answered the most important question you have today. WHAT IS GOING TO KEEP MONEY IN MY POCKET FOR THE THINGS I NEED TO SURVIVE.
RENT VERSES OUR FINANCING
This is a no brainer.
Rent = $800 a month = Total loss
Own = $650 a month = You own