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Can I Do Owner Financing if I Have a Mortgage on the property in Tennessee?

Are you pondering the question, “Can I pursue owner financing if I have a mortgage on the property in Tennessee?” Perhaps you are considering selling your house and contemplating seller financing. However, if there’s a mortgage still tied to your property, it might make the situation seem a bit complicated. We receive this question frequently, so we’ve decided to dedicate this article to providing an answer and suggesting strategic steps to navigate this situation…

Understanding Your Options: Owner Financing with a Mortgage

Homeowners who are contemplating selling their property have various options at their disposal. They could use the services of an agent, list it themselves, or even sell directly to a potential buyer. A growing number of homeowners are exploring the strategy of “owner financing” or “seller financing.” This process lets them sell their property to a buyer while receiving regular payments to offset the total cost of the house:

  • The buyer contributes a down payment
  • The buyer maintains regular monthly payments
  • The title transfers to the buyer once the agreed-upon price is fully paid

This strategy is quite popular among homeowners because it provides an efficient way to sell, and it expands the pool of potential buyers – including those who might be ineligible for traditional bank financing. Home buyers appreciate owner financing as well, as it provides more purchasing options without necessarily impacting their credit score.

However, what if you’re still paying off a mortgage? This leads to the question, “Can I pursue owner financing if I have a mortgage on the property in Tennessee?”

In short, the answer is: it’s complex, but not impossible.

Navigating Seller Financing with a Mortgage

In some states, there exists an option known as a “wraparound mortgage”. This allows you to provide a mortgage to a buyer, usually at a higher rate of interest, while continuing to pay your own mortgage. However, this arrangement isn’t legal in all states, and it depends on specific circumstances. There are additional clauses that you need to be mindful of if you’re considering owner financing with a mortgage.

Alternative Solutions

If you find that your mortgage makes seller financing challenging, you still have other alternatives to consider…

An option that might work for you is the rent-to-own arrangement. This bears similarities to owner financing (like ongoing payment and you maintaining ownership of the house), but also possesses key differences. For instance, a down payment may not be required, and the buyer needs to qualify for a mortgage from a bank at the end of a predetermined rental period.

If you’re contemplating owner financing while having a mortgage on your property, here’s another solution: reach out to us and discuss your property. As real estate professionals, we’re well-versed in a multitude of options that you might not know about. We can guide you through these choices and provide assistance, whether that’s through our services or by connecting you with someone who can help you navigate owner financing with a mortgage.

Get in touch with us today by clicking here to fill out the form or by calling us at 615-492-4511.


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