How does owner financing work? www.reimaverick.com Owner financing is becoming increasing popular in today’s economy due to how difficult obtaining a conventional mortgage has become. In order to qualify for most conventional mortgages, a person must have a certain credit score, must have employment for a certain number of years, and must be able to put 20% down on the property. Also, they must hope that the bank comes up with the same appraisal value of the property that everyone else in the equation does, or the loan will fall apart. The fact is, there are so many things that need to go right in order to obtain a loan that many people are turning to an alternative: owner financing. After all, in a free and competitive society, isn’t the ability to create new avenues in order to solve problems the backbone of capitalism? With that in mind, let’s answer the question ‘how does owner financing work?’ How Does Owner Financing Work | Conventional Mortgage Before we discuss owner financing, let’s first explain how a conventional mortgage works. Then we can explain the differences between a conventional mortgage and owner financing. In a conventional mortgage, a seller agrees to sell a house to a buyer for a price. When the sale is complete, the new buyer obtains a ‘deed’ to the house. The buyer goes to a bank to obtain a loan for the purchase, using the house as collateral should the buyer ever default on the loan, and the seller is then paid in full at the time of the …