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 IL 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 IL 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.
