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

An owner-financed loan and a conventional loan are two types of real estate loans commonly available in Virginia. The main difference between the two is who finances the loan. With an owner-financed loan, the seller of the property is the one financing the loan, rather than a bank or other traditional lender. This can be beneficial if a borrower does not qualify for a conventional loan or does not have the money to make a large down payment. The seller might be more lenient when it comes to credit history or other criteria for loan approval. With a conventional loan, on the other hand, the loan is funded by a bank or other traditional lender. The borrower still typically needs to meet certain criteria, and often will need to provide a down payment. In some cases, the loan may be secured by the property, meaning the lender can take possession of the property if the loan is not repaid. In Virginia, an owner-financed loan is generally seen as less secure than a conventional loan. As such, state law requires additional documentation and notification of buyers in these cases. Both types of loans will need to be properly documented and recorded with the county court to ensure they are legally binding.

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

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