How to Sell Your House With Owner Financing in Louisville, KY
Selling your home isn’t always a straightforward process. For example, some historic homes don’t qualify for a conventional mortgage. It’s also possible that there simply isn’t a lot of interest among home buyers in a local market where there are many houses for sale.
You don’t have to reduce the price on your home in the hopes of drumming up more interest. In Kentucky, you can sell your house with owner financing.
When selling your house with owner financing in Louisville, KY, you act as the bank for your buyer. You will set the terms your buyer will follow, along with requirements for the down payment, interest, and non-payments. With owner financing, Kentucky residents who otherwise may not have been able to purchase your home have a path to homeownership, and you can get your house sold, often at a higher price.
However, owner financing can be risky, so it’s important to protect yourself throughout the process.
We Buy Houses in Kentucky is dedicated to making the home buying and selling process easy. We want to make it safe too, which means arming you with the following tips to reduce your risk.
But first, let’s talk about the benefits of choosing owner financing in Louisville, KY.
What Are the Benefits of Owner Financing in Louisville, KY?
The biggest benefit of owner financing for KY sellers is that you get to collect the interest that is paid on the loan instead of the bank. Interest rates are usually higher than traditional mortgages too, which means even more money in your pocket.
If you want to sell your home fast, owner financing might be the right option for you. Using a conventional lender could take up to two months to close, while seller financing in Louisville, KY can be completed in just a few weeks.
With seller financing in Louisville, you get to choose the buyer. This may be a family member or a friend that you’re helping out, or this can be someone who is in the process of rebuilding their credit. It could also be the case that you want to leave your older home in the hands of someone who you know will take care of it.
Tips For Selling Your House With Owner Financing in Louisville, KY
Although owner financing in Louisville, KY comes with many benefits, it also comes with risks.
You could find yourself dealing with non-payment, and in the case of a default on the loan, you may have to initiate a foreclosure on the home. At the very least, you may find yourself on the hook for repairs and deferred maintenance if ownership of the home is returned to you after nonpayment.
Fortunately, there are things you can do to protect yourself from these possibilities.
Our tips for selling your house with owner financing in Louisville, KY include:
• Require buyer qualifications
• Write up a contract
• Have a plan if the buyer defaults
Require buyer qualifications
When you act as the bank and offer owner financing to a Louisville, KY home buyer, you get to decide who to approve, but it also means knowing when you should deny a buyer. You alone are responsible for vetting your buyer to determine if they should be approved. With a proper vetting process, you can increase your chances of receiving payments according to the terms of your contract.
You should conduct the same procedures that a traditional bank would follow to determine if you should approve a buyer. This includes asking your buyer to fill out a loan application, independently verifying their employment information, running a credit report, and conducting a background check.
You must examine and verify all the information your buyer provides to determine if they should be approved. Failing to collect and verify all of the information provided by the buyer may cause you to approve a buyer that a bank would have denied. This increases your chances of experiencing a default on the loan.
Write a contract
After you have found a credible buyer, you will need to put all of the financing details in writing. Your contract should include:
• Down payment information
• Loan term
• Interest rate
• Payment schedule
• Balloon date
The contract needs to include legal vocabulary that clarifies the contract to both the buyer and the owner. Without a formal, legally-binding contract, you leave yourself open to potential litigation from the buyer.
The contract must be signed by you and the buyer. Then, the promissory note must be filed with the county records department. For owner financing in Louisville, KY, that means filing the promissory note with the Jefferson County records department. This is what makes the contract legal and is what will protect you in case your buyer defaults on the loan.
Have a plan if the buyer defaults
In the excitement of selling a house, it is easy to overlook what is going to happen if the buyer falls behind on payments or completely defaults on the loan.
Iron out what steps you will take for late payments, missing payments, or falling behind on payments, and include these in your contract.
Have a plan for what you’re going to do if the buyer defaults on the loan. You might start a maintenance fund if repairs are needed after the loan is defaulted, or you might take the time to learn more about the foreclosure process.
If you choose owner financing in Louisville, KY to sell the home to a friend or a family member, you should also think about how it will impact your relationship. Will they expect you to cover payments for them, and what will your relationship be like if they have to be evicted from the home?
Have these difficult conversations with the buyer as part of the selling process. By clarifying expectations and talking about your concerns ahead of time, you can set the stage for smooth communications if things do go wrong.
Contact Us About Selling Your Home Today
Our family-run business has over 15 years of investment experience, so you can bet we have what it takes to help you sell your home.
If you’re ready to sell your house or you have questions about the process of owner financing in Louisville, KY, we can help. Contact us today to learn more!