owner finance questions

I am currently leasing out a home I own in the DFW area. My tenants are leaving at the end of Dec. and I am thinking about doing an owner finance or lease with option. I would rather do the owner finance. I have never done this and I had some questions. I currently have the home mortgaged and owe $75,000 on an assumable FHA loan. The current value is $105,000. First, how would I go about owner financing with my current situation. Second, if I do an owner finance would that person be able to utilize the homestead since they are buying the house. Third, how would the taxes and insurance be taken care of. Last question is where or whom would I talk to about this as far as contract etc… Anyones help is greatly appreciated!

Carlos Martinez

I don’t know much about an Owner Finance situation, but it’s obvious that if you do this type of deal, you become the buyers mortgage company and therefore your buyers take over the home as their own including everything that comes with it, taxes, insurance, homestead and the sort.
You can get a contract from a Real Estate agent or an attorney and even online.
I don’t know why you are selling, but if it was mine I would do a Lease Purchase on this home and the reason for this is the cash. I would sell it as a rent to own at it’s current market value and the way I would go about it is one year at a time. I would Lease it to potential buyers for a year with the option to buy any time during the lease. I would ask for at least 2% of the purchase price up front as consideration money and a hundred dollars more than what you are paying on your mortgage including insurance and taxes. They would be responsible for all maintenance and repairs and you can even use an escrow company to distribute the money to all parties. To attract these Tenant/Buyers you can offer what I call rent credit for example: If they are paying you $1200 a month a portion of that would go towards the purchase price. The way I usually do it is: I give them 50% rent credit so if it was me they would get 600 a month that would go towards the purchase price. Now, if they are ever late on a payment then that month’s credit is not awarded, this helps keep your money coming in on a timely basis.
I think this post is getting a little long, but if you would like to know more you can e-mail me at mrloexpertcruz@cableone.net and we can talk about it.

I can help you with the forms. You would need a deed of trust, a note, and a warranty deed. I would use a all inclusive deed of trust that will allow you to collect from the buyer and pay your underlying mortgage. This is also called a wrap mortgage. Will be glad to help you do this yourself and save hundreds in legal fees.

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737

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