3 Reasons Why You Should Buy Owner-Financed Land

Small farm house in the middle of mountains of land for sale owner financed

When it comes to land, there are a lot of different options out there. You can buy land from a developer, or you can buy land from an individual owner. Land for sale owner financed offer a variety of benefits to buyers, it has never been a more popular option.

There are pros and cons to each option, but in this blog post, we are going to focus on the benefits of buying land from an individual owner who offers owner financing.

Owner financing is becoming more and more popular these days, and for a good reason. When you buy land for sale owner financed, you bypass many of the red tape and hassle that traditional lending institutions deal with.

You also get to deal directly with the person who owns the land, which can be a huge advantage when it comes to negotiating terms and getting exactly what you want in a significantly faster way.

If you’re thinking about buying acreage, take a closer look at owner-financed deals. The potential benefits can be more than you ever would have guessed.

How Does Owner Financing Work?

Owner financing is an arrangement in which the seller of the property either agrees to accept payment in installments or chooses to finance the buyer by giving him enough credit. 

These land contracts typically take the form of a promissory note, with the land buyer making monthly payments to the seller until they pay off the entire purchase price, which might include property taxes.

Owner financing is a useful tool that buyers can use to purchase property assets without having to take out a traditional mortgage.

Top 3 Reasons Why You Should Consider Owner Financed Deals

You Might Not Qualify for a Traditional Loan

If you have bad credit or no credit, it can be difficult to qualify for a loan from a bank or credit union. However, when you finance land through the owner, they might be more willing to work with you regardless of your credit history. 

The Process Is Usually Quicker

When you buy land with cash, you avoid much of the red tape and hassle that traditional lending institutions deal with. Banks and other lending institutions can take weeks or even months to approve your loan and disburse the money. 

With seller financing, the process is usually much quicker since no third parties like real estate agents, brokers, or financial institutions are involved.

You Might Get a Lower Interest Rate

Because banks and other lenders are motivated by profit, they typically charge higher interest rates than individuals. If you finance your property purchase through the owner, you can get a lower interest rate and save on bank fees in the long run. 

What are Typical Owner Financing Terms?

With owner-financing deals, the seller finances the purchase for the buyer. The buyer then makes payments directly to the seller instead of to a bank or other lender.

Usually, owner-financed deals involve selling the property “on contract.” This means that the buyer pays the seller a specified amount each month until the total purchase price has been paid in full. 

The buyer doesn’t receive full ownership of the property until the contract is paid off. However, in case the buyer defaults on his payment, the seller can retain the title of the property along with the down payment.

Owner financing can be a great way to buy land for sale without having to go through a bank or another traditional lender.

There are some things you need to keep in mind before signing on any dotted lines. Make sure you understand all of the terms and conditions associated with an owner financing agreement before committing to anything, and carefully weigh the advantages and disadvantages before making any decisions.

Common Owner-Financing Terms 

There are a few terms that are common in owner-financed contracts on land for sale. It’s important to understand these terms before you agree to anything so that you know what you’re getting into. 

  • Purchase price — This is the total price you’ll pay for the land for sale, including any interest that may accrue over the life of the loan. 
  • Down payment — The down payment is the amount of money you’ll need to put down upfront in order to secure seller financing. The larger your down payment, the lower your monthly payments will be. 
  • Interest rate — The interest rate is the percentage of interest that will accrue on top of your purchase price of the owner financed land. This interest will be added to your monthly payment amount. 
  • Amortization period — The amortization period is how long you have to pay off your loan completely. The shorter your amortization period, the higher your monthly payments will be— but you’ll pay less interest overall. 
  • Balloon payment — A balloon payment is a lump sum payment that’s due at some point during your loan period (usually at or near the end). Balloon payments are often used when an amortization period would be too long for the buyer to reasonably afford otherwise.  

Top Things to Consider Before Buying Owner Financed Land

Seller financing can be a great way to buy property without going through a bank, but there are a few things you need to keep in mind. Here are our top four tips:

Pay Attention to the Interest Rate

One of the benefits of going through a bank or other lending institution is that they typically offer lower interest rates than an individual seller. This isn’t always the case, but it’s something to be aware of and compare before making a decision. 

Do Your Homework

This may seem like a no-brainer, but it’s important to do your research before entering into any type of financial agreement. Make sure you understand all the terms of the contract and that you are comfortable with them. If anything doesn’t make sense, ask questions until it does.  

Get Everything in Writing

This is especially important with seller financing because it protects both parties involved. Having everything in writing will help avoid misunderstandings or disagreements down the road. 

Know Your Rights

Both buyers and sellers have rights when it comes to financing, so it’s important that you understand what yours are before entering into any agreements. Once again, if anything is unclear, make sure you ask questions until it’s not. 

Why Buy Owner-Financed Land from Discount Lots

At Discount Lots, we offer owner financing on all of our properties. This means you can get the acreage you want without going through a formal underwriting process. Here are some of the benefits of financing your land purchase with us:

  • No credit check or formal underwriting process is required. 
  • Down payment as low as $1. 
  • Flexible payment terms. 
  • No balloon payments. 
  • You can become a proud owner of the land right at the end of the land agreement. 
  • Save money on closing costs. 
  • Start building your dream home or cabin right away! 

Final Thoughts on Land for Sale Owner Financed

Owner financing is a great way for people to buy land without going through the hassle of contacting and waiting on bank approval. It offers flexible payment terms and no balloon payments, which can be really helpful for people that want to own properties outright at the end of the agreement.

If you’re looking for an alternative to the traditional types of financing, then owner financing through Discount Lots is a great option. With no credit check or formal underwriting required, it is fairly easy to get started. To top it all off, our flexible payment terms and lack of balloon payments make it easy to budget for your land purchase. At Discount Lots, we offer owner financing on all of our properties so that you can start realizing your dreams, and building your dream home or cabin right away! Contact us today to learn more about how you can achieve that!

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