There was a time when buyers and sellers of a house struggled in their own different ways. The buyer usually struggled financially, while the seller struggled in attracting prospective buyers. The era of struggle is over. With the advent of a unique phenomenon, known as owner financing, the buyers and sellers nowadays find buying and selling property a piece of cake!
Owner financing is a financing option that allows a property owner to finance a prospective buyer of their property. People who are interested in a property but do not have enough money to make the payment can take this route. Earlier, people who were short on money took the bank loan route. Nowadays taking loans is not easy. After the great economic collapse of 2008, banks have become more circumspect in lending. After all, who can forget the liquidation of Lehman Brothers that triggered a global financial crisis in the late noughties?
Owner financing allows a property owner to sell their property to a buyer while acting as the lender. Owner financing is used when conventional methods, like bank loans, are not possible or desirable. Bank loans are a little difficult to secure. There is a need for a lot of paperwork before a bank will sanction the loan amount. Your past credit rating too will play a role in deciding if you qualify for a bank loan or not. Owner seller financing comes as a respite for people exploring options other than bank loans. In owner seller financing, the deal is between the prospective buyer and the seller. Your past credit score also is of no significance as the deal is between you and the seller.
Though this kind of arrangement is hugely beneficial as it cuts out the red-tapism involved with formal banking systems, it also comes with unique challenges. The challenges are usually for the sellers. To alleviate any problem posed by owner seller financing, professional loan servicing companies offer their expertise. In this blog, we will inform you in detail about the benefits of using a loan servicing company for owner financing in Houston.
But before we enumerate the benefits of engaging a loan servicing company, let us explain to you the role of a loan servicing company.
What does a loan servicing company do?
A loan servicing company acts as a third party between the lender and the borrower. In essence, a loan servicing company is a guarantor between the lender and borrower. Their main job is to manage the loan and ensure payments are done on time. This involves collecting loans from the borrower on time, keeping an eye on loan balance, and sending monthly statements to the borrower and lender. A loan servicing company may also look after other administrative tasks such as escrow management, property tax management, and insurance payments.
Loan financing companies are very important in owner financing. We enumerate here a few of the advantages of engaging a loan servicing company.
1. Professional Expertise:
A loan servicing company has expertise and experience in handling intricate matters such as managing loans. Loan management can be a little complicated and tricky job. If you don’t have exposure to Managing a loan can be complicated, particularly for someone who is not a professional in the field. A loan servicing company has the expertise to manage loans effectively and efficiently. This means that the seller can be confident that their loan is being managed properly, and that payments are being collected and processed correctly and on time
2. Mitigation of Risks:
The biggest advantage of engaging a loan servicing company is that it offers risk management. Loan servicing companies can help mitigate the risks associated with owner financing. For example, they can ensure that the buyer is creditworthy and has the ability to make payments on the loan. Additionally, loan servicing companies can help ensure that the property is properly insured and that property taxes are paid on time.
3. Reduced Administrative Burden:
If you do not have exposure to the financial world, managing loan can make a huge demand on your time and energy. Loan management is an enervating enterprise that demands patience, cool head, expertise, and experience. If you are not experienced, loan management can distract you from other crucial tasks. By using a loan servicing company, the seller can offload much of the administrative burden associated with managing the loan. This frees up time and resources that can be used to focus on other important aspects of the sale.
4. Improved Cash Flow:
A loan servicing company can help ensure that payments are made on time and in full. This can improve cash flow for the seller, who may be relying on the payments to fund other expenses or investments.
5. Improved Buyer-Seller Relationship:
By using a loan servicing company, the seller can maintain a professional distance from the buyer. This can be beneficial in situations where the seller and buyer have a personal relationship, as it can help preserve the relationship by avoiding any misunderstandings or disagreements that may arise when managing the loan directly.
We have explained to you in detail the benefits of engaging with a loan servicing company for owner financing. It is time for us to turn our gaze towards the Houston Market.
Houston is a cosmopolitan city with a robust real estate market. There are several loan servicing companies that specialize in owner financing in Houston. We, Houston Owner Financing, offer you our loan management service at an affordable price. Our long association with the Houston real estate market enables us to develop a foresight that is unique and credible.
The disruption in the real estate market brings with it a lot of options. But at the same time, continuous change also makes the market drought with volatility. One of the biggest changes in the real estate market is owner financing. Gone are the days when buyers were dependent only on banks for financing. Today, buyers can afford a house by taking the owner financing route. Though this arrangement is a win-win situation for the buyers, sellers have to be on guard. Running the background check to know the trustworthiness of a client, risk and loan management, etc., assume new importance in owner financing. To manage loans and keep an eye on loan balance, Loan Financing companies offer their expertise, making the job of loan management easy.
Houston Owner and Financing, headquartered in Houston, offers its cast experience and expertise in owner financing to mitigate any risk involved therein.