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

Owner-financed loans and conventional loans are both types of financing options for purchasing residential real estate in South Carolina. The main difference between the two is who provides the loan. With an owner-financed loan, the owner of the property is providing the loan to the buyer. With a conventional loan, the buyer obtains the funds from a traditional lender, such as a bank, credit union, or other financial institution. An owner-financed loan in South Carolina is not regulated by the same laws as a traditional lender, so the terms of the loan can vary widely. The buyer and seller can negotiate the terms of the loan, including the interest rate, repayment schedule, and amount of money to be borrowed. This means that the buyer may have to pay a higher interest rate than with a conventional loan, and may not qualify for certain tax benefits that conventional loans offer. In contrast, conventional loans must comply with the regulations of the lender such as the Federal Truth in Lending Act. This means that the buyer will get a fixed interest rate and repayment timeline. The buyer may also qualify for certain tax benefits, such as the mortgage interest deduction. In conclusion, an owner-financed loan and a conventional loan are two different types of financing options for purchasing residential real estate in South Carolina. An owner-financed loan is not subject to the same regulations as a conventional loan, so the terms can vary widely. However, a conventional loan is more regulated, so the buyer can expect a fixed interest rate and repayment timeline, as well as potential tax benefits.

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

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