Are you in possession of a house that you’re considering selling? Maybe you’re contemplating the idea of seller financing. However, if you currently have a mortgage on the property, you may be uncertain about the possibility of owner financing in IL. This is a common question that we receive, and to provide clarity on this matter, we’ve addressed it in this blog post. Keep reading to discover the answer and learn some effective strategies to move forward.
You have options
Homeowners contemplating a sale have various options available to them. They can enlist the services of a real estate agent to list their property, opt for a do-it-yourself approach, or choose to sell directly to a buyer. In recent times, many homeowners have become familiar with a straightforward approach known as “owner financing” or “seller financing.” This method enables them to sell their property to a buyer and receive regular payments that gradually 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 are enthusiastic about this method because it provides an excellent way to sell their property while also expanding their pool of potential buyers. This includes individuals who may not be eligible for conventional bank financing. Homebuyers, on the other hand, appreciate the flexibility that owner financing offers, which means they have more options to choose from and do not necessarily have to jeopardize their credit score to secure a home.
If you fully own your property, it’s possible to enter into a seller financing agreement. However, if you have an outstanding mortgage, you might be curious about whether owner financing is a viable option for you in IL.
The short answer is: it’s complicated.
Seller financing with a mortgage
In select states, a “wraparound mortgage” can be established. This type of mortgage entails providing financing to a buyer (often at a higher interest rate) while continuing to make payments on your existing mortgage. It’s important to note, however, that this practice may not be permitted in all states and scenarios, and there may be additional provisions to consider.
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…
If the above approach isn’t feasible, another option worth considering is rent-to-own. This method bears some resemblances to owner financing, such as ongoing payments and eventual ownership of the property. However, there are also notable differences, including the possibility of not requiring a down payment, and the need for the buyer to be eligible for a mortgage from a financial institution at the conclusion of the agreed-upon rental period.
Suppose you’re considering accepting owner financing despite having an outstanding mortgage on your property. In that case, there’s another alternative available to you: Reach out to us and discuss your situation. As seasoned professionals in the real estate industry, we possess knowledge of several options that you may not be aware of. We can guide you through these alternatives and assist you ourselves, or we can link you up with someone who can provide additional support.