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 Indiana 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, or they can list it themselves, or they can sell directly to a buyer. And, many homeowners are discovering a simple strategy called “owner financing” or “seller financing” that allows them to sell their home to a buyer and collect regular payments that 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 sell and a great way to find even more buyers – including those who might not be able to get traditional bank financing. Home buyers love it because it means more choices for them and they don’t have to necessarily 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 Indiana 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.
One option that might work for you is to refinance your mortgage to a lower interest rate or to take out some of the equity in your home. Refinancing can help you to reduce your monthly payments, which can make it easier to offer owner financing. You may also be able to negotiate better terms with your bank to allow for owner financing.
Another option is to sell your mortgage note to a third party. This can give you a lump sum payment upfront and transfer the monthly payment obligation to the third party. The third party would then collect payments from the buyer until the mortgage is paid off.
It’s important to note that there are pros and cons to each of these options, and it’s important to carefully consider each one before making a decision. Refinancing may have additional fees and may take time to process, while selling your mortgage note may result in a lower payout than what you would receive through monthly payments.
If you’re unsure of which option is right for you, it’s important to speak with a real estate professional who has experience with owner financing and can help guide you through the process. They can help you to understand the pros and cons of each option and make an informed decision that works for your unique situation.
In conclusion, owner financing can be a great way to sell your house and expand your pool of potential buyers. If you have a mortgage on your property, there are still options available to you, such as refinancing or selling your mortgage note. It’s important to carefully consider each option and speak with a real estate professional to ensure that you make the right decision for your unique situation.