Robin V. Wish - Real Living Suburban Lifestyle Real Estate

Posted by Robin V. Wish on 1/25/2021

Photo by SHOP SLO® on Unsplash

Selling a home requires a lot of decision-making. One of those decisions concerns financing, and there are numerous options available to both sellers and buyers. Real estate negotiations can be confusing, but there are some unconventional ways to finance a deal, and owner financing, for some buyers and sellers, can be the answer.

In today's world, it can be an option for buyers who are short on cash for a down payment, or for those who would like to trade some "sweat equity" for a reduced price on a home.

For sellers, taking back a note on their property provides guaranteed income for the duration of the note. In case of default on the part of the buyer, the property reverts to the owner.

Owner financing is not without risk, to either seller or buyer. Although the concept sounds simple, it can actually be complicated. But being open to carrying a note personally can speed a sale in difficult times. In a down market, it might be the only way to promote a sale. Typically, a commercial lender would not want to be a party to a transaction partially funded by the owner, but there are private lenders who routinely consider financing property on which the current owner takes back a second mortgage. In such transactions, however, owner financing is more risky.

Seller Reasons to Consider Owner Financing

In slow or deflated markets, owner financing represents a way to sell property at market value, or even at a higher than normal price. Buyers who cannot qualify for a traditional loan are sometimes willing to pay a premium in order to buy with a lower down payment. 

Property owners who don't need cash proceeds to buy another home, view the potential of stable monthly income for the term of the loan as a distinct advantage. It eliminates most worries about ongoing maintenance and repairs. In practical terms, the seller no longer "owns" the property, but retains the right to reclaim it in case of default. Money earned is retained, and the property could be resold, theoretically at a higher price.

If a home needs repairs that the seller is unwilling or unable to complete, some buyers would be willing to exchange needed work for a discounted sales price, resulting in real value for both parties.

Buyer Incentives

For a buyer short on cash, starting a new job, or moving to a new area, securing a traditional mortgage can be difficult. A lease-purchase option, possibly in tandem with a commitment for owner financing can be a viable path to a secure financial future. 

Frequently, the option for owner financing is more available for a lot or for undeveloped land. If you're interested in buying land on which to build a home, look for owner-financed deals offering a short-term loan with a balloon payment for the balance at some time in the future.

Owner financing can be beneficial to both parties, but it is important that understand legal requirements and ramifications.

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Posted by Robin V. Wish on 11/2/2020

Image by Tumisu from Pixabay

If you’re in the market for a new home, chances are you’ve been evaluating your finances. As a first-time homebuyer, there are programs in place to help with the down payment. According to the December 2019 Realtor Index Confidence Survey, first-time homebuyers accounted for 31% of all sales, and 77% put down less than 20%.

Once you’ve worked with a mortgage lender to get a competitive rate, these programs may help with getting into your dream home:

  • VA Loans
  • Are you a veteran or active duty? If so, you won’t need to look far. This program helps individuals get a home with no down payment. It’s backed by the government and has a series of requirements to meet. There are also Adapted Housing Grants, which help purchase a home adapted for a service-related disability, or if upgrades need to be done to the home to make if accessible.

  • USDA Loans
  • If you’re looking in a rural area, this loan by the Department of Agriculture may be the one for you. There is no down payment to participate, but there are income requirements. When hearing the word rural, you may think it’s totally country but there are tons of “rural” areas that are well populated.

  • HUD Good Neighbor Next Door
  • This program from the Department of Housing and Urban Development (HUD) lists eligible properties by state and is not limited to first-time homebuyers. The property must be in an area marked for revitalization and is only open to certain professions like law enforcement officers, firefighters, emergency medical technicians and teachers. If approved, you must live in the property for at least 36 months and receive up to 50% off the list price of the home.

    Local First-Time Homebuyers Grants

    Many municipalities offer funds from their own first-time homebuyer programs. There are certain requirements to meet, such as requiring the owner live in the home for a short period of time. In many cases, the grant is forgivable over a period of time. There are also block grants through Congressional districts, which are distributed through local programs.

    A mortgage broker will be able to recommend additional programs you may qualify for based on the area you are attempting to purchase in. Homeownership doesn’t have to be complicated – it may just take a little work to get what you want and the assistance you need. Call a realtor and mortgage broker to get started on the process today.

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    Posted by Robin V. Wish on 3/18/2019

    For those who want to acquire a house, it helps to get your finances in order. That way, you can quickly and effortlessly navigate the homebuying journey without having to worry about how you'll afford your dream house.

    There are many quick, easy ways to straighten out your finances before you embark on the homebuying journey, such as:

    1. Assess Your Credit Score

    Your credit score ultimately can play a major role in your ability to secure a great mortgage. If you understand your credit score, you may be able to find ways to improve it prior to conducting a home search.

    It is important to remember that you are entitled to a free copy of your credit report annually from each of the credit reporting agencies (Equifax, Experian and TransUnion). Request a free copy of your credit report today, and you can take the first step to evaluate your credit score.

    If you find that your credit score is low, there is no need to worry. You can always pay off outstanding debt to improve your credit score over time.

    Also, if you identify any errors on your credit report, you'll want to address these mistakes immediately. In this scenario, you should contact the agency that provided the report to ensure any necessary corrections can be made.

    2. Look Closely at Your Monthly Expenses

    When it comes to buying a house, it generally helps to have sufficient funds for a down payment. The down payment on a house may fall between 5 and 20 percent of a home's sale price, so you'll want to have enough money available to cover this total for your dream residence.

    If you evaluate your monthly expenses, you may be able to find ways to save money for a down payment on a house.

    For example, it may be beneficial to cut out cable TV for the time being and use the money that you save toward a home down payment. Or, if your dine out frequently, cooking at home may prove to be a substantial money-saver that could help you speed up the process of saving for a down payment.

    3. Get Pre-Approved for a Mortgage

    With pre-approval for a mortgage, you can enter the housing market with a budget in hand. Then, you'll be better equipped than ever before to narrow your search to houses that fall within your price range.

    To get pre-approved for a mortgage, you'll want to meet with banks and credit unions. These financial institutions can teach you about different mortgage options and help you assess all of the options at your disposal.

    Furthermore, don't hesitate to ask banks and credit unions about how different types of mortgages work. This will enable you to gain the insights that you need to make an informed decision about a mortgage based on your financial situation.

    If you need extra help as you prepare to pursue a house, you may want to hire a real estate agent as well. In fact, a real estate agent can help you find a high-quality house at a budget-friendly price in no time at all.

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