This detailed sample Conventional or Seller Financing Agreementcomplies with Texas law. Adapt the language to fit your facts and circumstances. Available in Word and Rich Text formats.
Texas Conventional or Seller Financing
Category:
State:
Texas
Control #:
TX-1071
Format:
Word;
Rich Text
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FAQ
Owner financing can be a good option for buyers who don't qualify for a traditional mortgage. For sellers, owner financing provides a faster way to close because buyers can skip the lengthy mortgage process.
Texas no longer allows owner-financing under last year's Texas House Bill 10 the SAFE Act unless the seller has a license. SAFE (which stands for Secure and Fair Enforcement for Mortgage Licensing Act) was passed in order to comply with a federal law of the same name.
Instead, the recommended method to provide seller financing is using a Warranty Deed, Promissory Note and Deed of Trust. Texas Property Deeds, all documents are prepared by a Texas licensed attorney Board Certified by the Texas Board of Legal Specialization in Residential Real Estate Law.
Advantages of buying an owner-financed home In a seller-financed transaction there are no closing costs such as loan origination fees, discount points and mortgage insurance premiums. Because you won't have to wait for bank approvals, closing can happen much quicker than with traditional financing.
Interest rates for seller-financed loans are typically higher than what traditional lenders would offer. The seller takes on some risk by holding financing, and he or she may charge a higher interest rate to offset this risk. It's not uncommon to see interest rates from 4% to 10%.
Owner financing can be a good option for buyers who don't qualify for a traditional mortgage. For sellers, owner financing provides a faster way to close because buyers can skip the lengthy mortgage process.
For sellers, owner financing provides a faster way to close because buyers can skip the lengthy mortgage process. Another perk for sellers is that they may be able to sell the home as-is, which allows them to pocket more money from the sale.
Owner Financing Example Over the course of the loan, the buyer makes monthly payments of $426 and is responsible for property tax and insurance payments. At closing, the buyer receives title to the home that is subject to a mortgage held by the seller.