7 Ways To Owner Financing

7 Ways To Owner Financing

 

 

 

 

owner financing


 

 

7 Ways To Owner Financing

 

Residential sales continue to rise with interest rates holding at all time record lows…

Some residual effects of a changing marketplace are still looming and banks, buyer, and sellers are still apprehensive to investing…

While these homeowners or banks marked with low credit score buyers with small down payments or job insecurity still remain apprehensive to buy…

In addition, the Generation Y era buyers that make up a quarter of the market place today are either unrealistic or non-committal to buying a home…

These seven ways to owner financing that will allow these buyers a better alternative for obtaining loans, that frequently an institution would reject, offers many reasons why seller financing is beneficial to both parties…

For the seller, it is reducing market and closing times or exposure in many instances…

These are quite common when the property is already listed with a real estate Broker…

However, if the property is difficult to finance, (i.e., condominiums, single wide mobile homes, commercial property), then Seller financing is a must and sometimes a longer wait…

And the least common of them all is called “swapping” that still occur today…

Where it allows parties to swap out assets along with financing sometimes involved…

 

 

 

 

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For the investors, there are wrap loans, lease options, subject to’s, free and clear, Contract for Deeds and my favorite the 50/50 sweat equity approach to owning financing…

Even with the benefits of these seven ways to owner finance a home comes risk that otherwise would be managed by a lending institution…

Worst case scenarios are bankruptcy, maintenance, and insurance coverage while the most common concerns are buyers making payments and getting the title back yet these are rarely the case…

The buyer is also at an advantage to seller financing…

The buyer in many instances prefers the installment sale compared to regular conventional financing. It does not require bank income and credit approval…

While it comes in handy when there was a recent divorce, and bankruptcy or self-employment income (if needed) that cannot be verified…

In essence gives the Buyer a chance to improve his credit rating during this time…

But one of the biggest advantages is no loan cost, i.e., points, origination fees, underwriting charges, appraisals, credit reports, title insurance that can amount to thousands of upfront fees for the buyer…

Not to mention fast closing times just in case the buyer or seller is in a hurry to move…

 

 

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“Both buyer and seller should do their homework before agreeing to seller financing. The seller should evaluate the buyer’s credit history as thoroughly as a conventional lender. The buyer should fill out a credit application with employment information and credit references. The seller must examine this application and check all references. Verify the buyer’s credit rating at all three credit bureaus. The seller must make sure that the buyer will be able to pay the monthly mortgage payments.”

Before you make a final decision, however, you may wish to consult with your Realtor, certified public accountant, or attorney…

Your circumstances will determine what is appropriate for you, and they often can help you make an informed decision…

 

 

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About the Author: I’m Michael Kevorkian and I am a real estate broker and investor in the Chicago area. I own New Market Realty Inc. a residential real estate investment brokerage in the Wicker Park neighborhood.  My blog is here to help spread the word and love for real estate to all who care to know more. Realtors & investors alike, if it’s real estate and it’s good… You can bet I’ll get it on my website to share the awesomeness with you! You can follow me on , Twitter, and Facebook.

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