HELP! I am a newbie and was offered an owner finance option!

[Isamar Ochoa]

HELP!

I am a newbie and was offered an owner finance option!

I know very little on this topic but have heard this can be a great option. I am hopeful you all can share your experiences, warning, and tips.

I am planning to live in the home and househack… The numbers look promising even if rents drop a bit in the Bay Area. This home is 30 years old, fully renovated, a good part of town, one block away from a university, pretty much an A-list home.

I spoke with the representative of the owner and she shared the following…

Price is $1.5M and the seller wants 20% down payment which I DO NOT have. The seller is not set on an interest rate, but they are thinking (4.65-4.77). I think this is high since I just did a refinance and was offered 3.65% but on a much smaller loan. But I understand the terms are different on an owner finance deal. When we began discussing owner financing, I was hoping to negotiate a lower down payment, but the owner is pretty set on 20%.

Should I ask my loan officer (who is currently doing my refinance) about getting me a loan for this down payment? Has anyone had to get creative for a DP this large?

What should I be looking out for? Warnings? Negotiating tips etc…

Does this flat-out sound like a terrible deal?

The seller knows the mortgage can be covered with the rents so they are confident who over purchases the home can make the payment. So, I am hopeful I can make this work since my income isn’t high enough to easily qualify for a loan this big on my own (I’d need a co-signer which is not impossible but would rather do this on my own).

I am also going to have my agent check comps to see if we should offer less.

Thanks in advance!