Here's how Owner Financing works, what it costs, what happens at closing, and what to expect going forward. If you have questions we don't answer here or in the FAQ, reach out. We'd love to chat.
Most people buy a home with a mortgage from a bank. The bank gives the seller cash, you owe the bank, and the bank holds the loan for 30 years. Owner financing skips the bank entirely.
Here's how it works in practice. You find a home where the seller is open to financing it themselves. You and the seller agree on the price, the down payment, the interest rate, and the monthly payment. A licensed Tennessee title company (the same one banks use) handles closing, due diligence, and drawing up all of the necessary paperwork. At closing, you walk out as the legal owner of the home.
Every month after that, you make a payment to the seller (or, sometimes they may choose to use a third-party servicer that handles it for both of you). It's a real, recorded mortgage. Just one where the lender is the seller who used to own the house, not a Wall Street bank.
Here's exactly what happens, step by step, with realistic timelines. Most DRP buyers go from first conversation to keys-in-hand in 15-25 days.
Quick five-minute form: your comfortable monthly, your down payment, the markets you'd consider, and what kind of home you want. No commitment. We use this to filter the DRP listings down to the ones whose terms actually fit you.
You see the down payment, monthly, and interest rate on every listing card before you ever step inside. We schedule tours, walk the property with you, point out what's good, what's not, and which ones you want to take the next steps on.
You submit an offer with the terms you and the seller will agree to: down payment amount, interest rate, monthly payments, etc.
This is the part that keeps everything legitimate. A licensed Tennessee title company runs a title search, prepares all closing documents, and records everything with the county. The seller signs over the deed. You sign the note promising to pay. Both are recorded.
You own the home. Start making your monthly payments. You can paint, renovate, even rent out a room.
Owner finance interest rates typically run a little higher than bank rates, normally 1 to 3 points above whatever the going 30-year mortgage rate is. The trade-off is you don't need bank approval. Each home is slightly different in regards to exact interest rate, closings costs, etc. If you're interested in a home, ask about the terms.