What is the difference between an owner-financed loan and a conventional loan?

An owner-financed loan and a conventional loan are two different types of financing options for home buyers in New Mexico. Each has pros and cons, so it is important to understand the differences between them. An owner-financed loan is when the seller of a home lends part or all of the money needed to purchase the home to the buyer. This type of loan can be beneficial for buyers who may not qualify for a traditional loan. With an owner-financed loan, the buyer may be able to negotiate a down payment, interest rate, and repayment terms that are more favorable than a conventional loan. In contrast, a conventional loan is a type of loan that is obtained from a mortgage lender such as a bank, credit union, or online lender. This type of loan typically requires the borrower to have a good credit rating, a 20 percent down payment, and to meet various other eligibility requirements. A conventional loan may have lower interest rates than an owner-financed loan, and can often be used to purchase a larger home or one in a more desirable location. When considering financing options for a home purchase, it is important to research both options and decide which one is best for your particular situation. An owner-financed loan may be able to provide more options for prospective home buyers, while a conventional loan may provide more competitive terms and rates.

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What is the difference between an owner-financed loan and a conventional loan?

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