How owner financing works
With owner financing, the seller acts as the bank. You pay a down payment, then monthly payments to the seller at an agreed interest rate over a set term. There's usually no bank approval, appraisal or long underwriting process, which is why it's so common for vacant lots around Lake Placid and Placid Lakes.
Two common structures
- Deed with note and mortgage — you get the deed now; the seller holds a recorded mortgage. Generally the stronger protection for buyers.
- Contract for deed / agreement for deed — the seller keeps the deed until you finish paying. Make sure it's recorded with the Highlands County Clerk.
Land loans vs. mortgages
A home mortgage is secured by a house; a land loan is secured by dirt, which lenders see as riskier. That's why land loans usually come with:
- Higher down payments — often 20% to 50%
- Shorter terms — commonly 5 to 15 years
- Higher interest rates than a home mortgage
If you plan to build soon, a construction-to-permanent loan can sometimes roll the land and the home into one loan.
Typical down payments
Owner-financed lots often start with a small down payment, sometimes a few hundred to a few thousand dollars. Bank land loans generally ask for more. A bigger down payment means lower monthly payments and less interest overall.
Questions to ask any seller
- What's the total price, interest rate, term and monthly payment?
- Is there a prepayment penalty if I pay it off early?
- Will I get the deed now, or after the last payment?
- Will the agreement be recorded with the county?
- Who pays property taxes while I'm making payments?
- What happens if I'm late or miss a payment?
- Is there a title search and title insurance included?
- Can I build or place improvements before payoff?
Before you commit, run through our land buying due-diligence checklist.