Besides being known as the “Buckeye State,” Ohio is also known as the “Mother of Presidents.” If you want to run for president, consider moving to Ohio. Suppose land in Ohio is what you want. In that case, the woodland is known for being excellent grounds for hunting, and Ohio land has a reputation for reaping fertile crops. Ohio has its advantages, but is it worth buying land by owner?
How is Buying Land by Owner Different?
Purchasing land for sale by owner is called owner financing. Owner financing allows buyers with issues getting loans to buy a home or land. The catch is that they will get the land without a traditional mortgage. The land for sale in Ohio by owner would be financed by the person you are buying from. Here’s where the drawback comes in. The interest rate will be higher than the current mortgage rates, and a balloon payment will be due after a minimum of five years.
A balloon payment or balloon mortgage is issued for set periods of time. These payments are usually low and may only cover the interest acquired. A loan balance remains at the end of the term loan, and the borrowers must either pay it off or refinance the purchase. Though these are still structured as “monthly payments,” they are designed to be paid off over a more extended period than the actual term of the loan. Balloon mortgages include the following:
- Loan Amount
- Interest Rate
- Loan Term
- Loan Amortization Schedule: Scheduling out a fixed-rate loan into equal payments. A portion of your monthly payments may cover interest; the remaining amount goes toward the loan principal.
Should I Finance My Ohio Land This Way?
Let’s ask a better question. How badly do you want Ohio land? Owner-financed land and balloon mortgages are considered much riskier for borrowers. In fact, many lenders may not even offer them due to leaving the borrower owing large sums they may only be able to afford by taking out a new loan. However, there are a small number of cases where this might be the best plan of action.
- The borrower can’t qualify for a standard loan because their income fluctuates.
- The purchase is being processed by seller financing, but the seller doesn’t want a note for more than 5 or 10 years.
If any of the above applies to you, owner financing could be your best bet. However, be prepared for longer-term payments. Hopefully, the allure of the famous Cedar Point Park will be enough of a draw for you.