Do you have a house to sell? Perhaps you’re thinking about selling, and maybe you’re thinking about seller financing. But if you have a mortgage on your house, you might be wondering, “Can I do owner financing in MI if i have a mortgage on the property?” We get this question a lot so we decided to answer that question here… Keep reading in this blog post and we’ll answer that question and give you some strategies to move forward…
You have options
Homeowners who are thinking about selling have several options. They can list their home through an agent, which provides professional marketing and negotiation expertise. Alternatively, they can list it themselves, saving on commission fees but requiring more personal effort in managing the sale. Another option is to sell directly to a buyer, often resulting in a faster transaction but possibly at a lower price.
In addition to these traditional methods, many homeowners are discovering a simple yet effective strategy called “owner financing” or “seller financing.” This method allows them to sell their home to a buyer and collect regular payments that pay off the house. Here’s how it works:
- The buyer pays a down payment: This initial payment is agreed upon by both parties and is typically a percentage of the total home price.
- The buyer makes regular monthly payments: These payments, which include principal and interest, are made directly to the homeowner.
- When the agreed-upon price is paid in full, the title reverts to the buyer: At this point, the buyer owns the home outright.
Homeowners love this strategy because it offers a great way to sell their property and can attract more buyers, including those who might not qualify for traditional bank financing. For example, a family with a stable income but poor credit might be unable to secure a mortgage from a bank. With owner financing, they have the opportunity to purchase a home, make monthly payments, and eventually own the property.
Home buyers also appreciate this method as it provides them with more choices and flexibility. They can buy a home without immediately impacting their credit score or dealing with the stringent requirements of a traditional mortgage.
Overall, owner financing is a win-win solution that broadens the market for sellers and opens up new opportunities for buyers.
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 MI if I have a mortgage on the property?”
The short answer is: it’s complicated.
Seller financing with a mortgage
In some states, you can create something called a “wraparound 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. However, this is not legal in all states and all 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’re unable to sell with seller financing because of a mortgage, you have other options…
An alternative that might 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 might 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 might not know about. We can walk you through those options and help you out ourselves or we can connect you with someone who can help you.