On a Monday morning, as the sun rises over another work week, driving to the office, one must wonder if greater meaning lies behind the existence of these contracts than is generally understood. The articles and posts in Culture Goal Online’s legal section are aimed at providing useful information to readers so they may pursue or defend claims. However, this article explores the lifestyle impact of so-called “owner finance contract texas” in Texas, which explains the importance of understanding the terminology before seeking legal guidance.
By definition, an “owner finance contract” is a legal agreement where the seller of the property provides the financing for the buyer to purchase the property. This financing is provided instead of the buyer obtaining a traditional mortgage loan from a bank or other lender. Texas real estate law recognizes two forms of owner finance contracts depending on the residency of the buyer(s). While this article does not attempt to explain the nuances of these laws or provide legal advice, a useful reference article has already been published, which can be found here.
From a Texan’s cultural perspective, home ownership provides a sense of stability and belonging to the community. Moreover, Texan home owners like fascinating stories about their home and why they purchased it. Did they say, “I’ll take the coolest house on the block?” or “My house is in the best school district” or “We bought this house in hopes of cashing in on a rise in home prices,” and so forth. Home ownership instills pride in property owners and allows them to feel more vested in their community. Putting aside the emotional benefits of home ownership in favor of simply looking statistically at the economics of real estate ownership, economist Thomas Sowell has even argued that homes are a good “investment” that in most cases appreciates in value.
However, like most things, owner financing is not all good or all bad, it depends. Owner financing can provide the buyer with a lower cost alternative to a conventional loan. In general, owner financing tends to save the buyer costs associated with closing fees, property appraisals, professional credit checks, and the like. Owner financing often carries with it a lower interest rate and a lower monthly payment. Owner financing can also allow buyers who might not qualify for a loan to obtain the long-term benefits of home ownership.
The risk involved with owner financing extends past the undue hardship of paying top dollar for a property. It is possible the buyer may lose the money paid to the seller should any mistake be made in transferring the title of the property, or if the monthly payments are not received, or a host of other issues generally unseen when the “deal” is made and the paperwork is signed. The buyer might also lose the property if any amount owing is not paid on time, which could later require foreclosure proceedings to gain control of the property.
In the end, owner financing provides buyers with all of the risks and rewards associated with home ownership along with a legal workaround of some of the typical barriers to entry into the real estate market. In talking with Texans about their real estate transactions, I often hear buyers talk about how their owner financing deal was “a great deal” or “the best deal they ever made,” while hearing other horror stories about losing money and never receiving the promised home. The unfortunate reality is that as with everything, there is another side to the story that must be fully explored in order to make an accurate and fair judgement. This is the beauty of the business of real estate, it is often more complicated than a deed and promissory note. The lifestyle and cultural impact of owning a home is real and profound.
Ultimately, home ownership through owner financing can impact not only the buyer’s balance sheet, but their quality of life and emotional well-being, and thus the writer hopes that this article sheds some light on the importance of understanding the terminology before making legal commitments. For more information on real estate laws in Texas, you can visit the Texas Real Estate Commission.
