Rent to own or owner financed?

Reginald Maxi: Owner financed. But there are several issues here if the person still has a mortgage on the property technically with out bank approval he will not be able to sell it to you and present clean title etc. so you do not really own anything. Therefore the true owner, the seller, can still acquire loans against the property etc.Rent to own is dangerous in this environment. The house can go into foreclosure and be gone right out from under you and so will any down payment you make and rents you THOUGHT were going toward the hoem purchase.If the person owns the property outright and finances it for you the that is a great way to go providing all legal documents are filed, you get your inspections and an appraisial and do all this under the eyes of a good real estate Atty....Show more

Tyrone Disanti: On owner financing - owner only has to pay taxes on the interest amount and he can deduct the property tax.On rent to own - the seller has to pay taxes on the! full amount of rent less any repairs and property taxes.

Coleen Carignan: Done properly, with the option to buy expiring in December of each year, the tax liability will be the same. The rent paid during the calendar year becomes down payment instead of rent. Do not allow the option to run past Dec. 31 each year. Start the option over again on Jan. 1.The one person answering is completely wrong on all accounts. If done properly, owner financing is as safe as a first mortgage with a bank, if done improperly, it is as risky as any improperly done loan.You do not need the banks permission to carry the contract yourself. As long as the bank receives it's mortgage payment each month on time, the bank has no say in someone transferring their equity in the property to another person. It is the same as you putting your childs name on the deed, or getting a second or third mortgage on the property. It has no affect on the first mortgagee's standing, and so their permission ! is not required.The sale does not relieve the seller of his ob! ligations to the bank. That is why the payments are made to an escrow company, who pays the bank mortgage each month, and sends anything left to the seller. The bank gets it's payment each month before the seller gets paid. The only way the bank wouldn't get paid on time would be if the buyer (you) failed to make the monthly payment to the escrow company.I have purchased real estate with the seller carrying the contract many time over the past 32 yrs. Most of them had a bank mortgage that was paid off as I paid off the seller. Various real estate attorneys handled the purchase / sales to insure all is done properly. All that is necessary is for the bank to receive their money before or at the same time the property is paid off.Owner Financed is a great deal for a seller, he gets an interest rate higher than he can get for other investments, and if the buyer defaults, the seller can start making the payments to the bank again and foreclose on the buyer, and resale the prope! rty again, keeping the down payment and all payments the buyer made to him....Show more