Hard money lending Vs Owner Financing: What is the difference? - Buyer Investor Match

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Here at Buyer Investor Match, our business model creates a win-win situation for prospective home buyers facing credit-challenges and investors who are looking to make passive income with real estate.

Prospective buyers who can’t obtain a mortgage from conventional lenders due to their strict underwriting norms can buy a home in an owner financing arrangement under our program. Real estate investors can make mailbox money by leveraging their credit score and owner financing homes to credit-challenged buyers.

While working with buyers and investors, we have seen that people are usually confused about how owner financing (also known as seller financing) works. Many people confuse them with hard money lending. In reality, a hard money loan is very different from owner financing. Here is how:

Hard money lending

Hard money loans are very popular among people investing in fix-and-flip projects. Hard money lenders won’t take into consideration your credit score when reviewing a loan application. They give more importance to the value of the property you are buying. They will lend you money usually when the loan amount is lower than the market value of the property. Their interest rate is typically a lot higher than that offered by conventional lenders. These loans are short term, ranging from one year to five years. All these conditions make hard money loans useless for regular buyers.

An investor involved in a home flipping project may prefer to take out a loan from a hard money lender because this arrangement offers many advantages. Since no credit check is required, the loan is processed very quickly, usually within a week. The investor can get the lender to customize the loan agreement (specifying repayment plan and default consequences) to suit his or her situation. For example, if an investor estimates that the flipping project will take six months, he or she can offer to pay off the loan within a year. A conventional lender won’t offer a mortgage for such a short period.

Owner/seller financing

An owner financing arrangement is one of the best options for credit-challenged buyers. Under our program, investors looking to make a fixed amount of monthly income buy homes and sell them immediately to credit challenged buyers usually on the same day.

In this arrangement, buyer borrows from the seller, instead of a conventional lender. Our program doesn’t require buyers to make any balloon payments and they can pay off the debt over a period of 30 years. Alternatively they can refinance whenever they can qualify for a conventional loan without having to pay any pre-payment penalties.

Buyers can build their credit while making monthly payments to the seller on time. A seller financing arrangement ensures a faster closing because the loan is processed without any credit check or income verification under our program.

Seller financing is also a great way for real estate investors to make passive income – month after month, year after year. They get predictable returns on a consistent basis without even leaving their homes. Their investment is secured with collateral and they don’t have to suffer the pains usually associated with property management and home flipping. No learning curve is involved as we repeat the same process in every deal.

Do you have any questions regarding our owner financing program? Click on the link below to set an appointment with us using our online scheduler:

3 Steps to Homeownership

With No Credit Check or Income Verification
1
SCHEDULE : · Schedule a time to meet with us and learn how our proven system works.
2
PICK : · You pick any home you want, even a brand new home.
3
RECEIVE : · Get the keys to your dream home and a deed in your name with as little as 15% down.
Araceli and her family relocated from California. Self employed and unable to qualify for a loan, they used our program to get owner financing on a brand new home.
Araceli

Three Steps to Homeownership

SCHEDULE : Schedule a time to meet with us and learn how our proven system works.

PICK : You pick any home you want, even a brand new home.

RECEIVE : Get the keys to your dream home and a deed in your name with as little as 15% down.