Owner Financing

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Owner Financing
Posted by: Sam Brewer Aug 9 2004, 11:38 PM
In owner financing, can the home be legally sold below the appraised value and is there a minimum level for interest charged, i.e.,0%, 1%, 2%, ect.? This pertains to Florida.
Posted by: loanuniverse Aug 10 2004, 09:25 AM

I am not an attorney and you should not take my feedback as legal advice or use it as a basis of any decision.

Having said that, it does not occur to me why would the government make laws to control a private transaction between two parties. If I wanted to sell a property for a price lower than its appraised value, there is nothing to stop me. I think it works the same way if I wanted to finance this at a rate lower than market.

On the other hand, once a third party is involved other considerations are taken into account. Specifically, the fact that the lender will use the lower of “purchase or appraised value” when computing loan-to-values.

There might be other matters to be considered such as what is an “arms length” transaction if you are related to the seller. Maybe tax implications?

I think it is always good to consult an attorney.
Author: Commercial Loan Underwriter