Is Mortgage Your Only Option?
At present, thanks to the ever-increasing use of the internet to seek out houses for sale, and the increased contribution of homeowners in the buying and selling procedure, there is better interaction between the buyer and seller. Not only is this good for public relations, it is also a superb opportunity to discover other funding options, for the buyer and for the seller.
It is not uncommon on the part of the buyer to assume their only option when buying a home is to acquire a mortgage, but the traditional lending procedure. This is not always the case, and these days more than ever, buyers and sellers are coming together with creative and accommodating ways to affect the purchase, or sale, of the home depending upon your position as buyer or seller.
Quite often, folks interested in purchasing a home lack the 20% down payment often required from the lender. Provided the seller has established equity of the home, there are other options for the buy and sale agreement. Seller financed mortgages are the most frequent alternative mortgage option exercised; seller financed mortgages however, are not the only option that can be considered. In this article, we’re going to take a look at some of the option mortgage options that are rarely exercised, but that do provide tremendous advantage to the buyer and seller.
As a seller, the conditions must be present that allow you to offer the buyer alternative options. Your mortgage balance must be considerably less than the fair market sale price or your hands are basically tied. Imagine a scenario: you're ready to sell your home, the buyer is ready to purchase your home, and they simply do not have a 20% down payment. What they do have is a 5% down payment, and the aspiration to work with the seller and the mortgage lender. You're asking price for the home is $80,000 and the appraised value of the home is $85,000; your existing mortgage is $50,000 and the lender requires the proposed buyer to provide a $16,000 down payment. How can a solution be reached? If you, as the seller are eager to take a second lien on the property, there is a feasible solution. The fact that the house appraises for more than the asking price, automatically provides the buyers with a $5,000 level of equity, so they only need $11,000 more to reach a 20% down payment. They have $4000; in order to accommodate the buyers, you could accept $74,000 in upfront mortgage money from the lender, and take a second lien on the $6000 difference. This method works only if you’re willing to take the second lien, and the buyers are credible and reputable folks.
Taking second liens or second mortgages are growing in popularity as a means to sale increasing value real estate in today's rapidly growing market. There are other spins offs from the basic formula described, however the scenario above is the most common and provides the buyer and seller with the basis for growing with creative add- ons. Of course, the seller financed mortgage is still the meat and potatoes of the alternative financing business.
How does the seller financed mortgage work? Generally, it works in this manner: if the seller owns the house outright he or she may decide to finance a mortgage for the buyer, and set up an amortized loan. Thanks to the readily available personal computer, loans can be constructed that would have only be accessible via an accountant or lending institution, 20 years ago.
Of course, how you make a decision as a buyer or seller to ultimately close a deal, will depend on many factors, this may be just one of the more important aspects. How well you know each other, credit ratings, and the dollar value of the mortgage will also influence your decision.
In spite of of the final decision, the opportunity exists to explore other avenue other than the traditional mortgage lending institutions, or mortgage companies. And, from time to time, you never know, the deal from the seller financed mortgage may open more options than just a mortgage for homeownership!
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Disclaimer:
The general information provided by http://MortgagePalace.blogspot.com is intended as an educational purpose only, and should not be interpreted as legal advice. The law varies drastically by location and legal specialty, and http://MortgagePalace.blogspot.com makes no promises about the accuracy or completeness of the information provided. You should not rely on our information when making legal decisions. We recommend that you consult with a lawyer to get professional legal advice on how best to deal with your situation.
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** Attn Ezine editors / Site owners **
Feel free to reprint this article in its entirety in your ezine, blog, autoresponder, or on your site so long as you put a link back to this original post, leave all links in place, and do not modify the content in anyway.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
It is not uncommon on the part of the buyer to assume their only option when buying a home is to acquire a mortgage, but the traditional lending procedure. This is not always the case, and these days more than ever, buyers and sellers are coming together with creative and accommodating ways to affect the purchase, or sale, of the home depending upon your position as buyer or seller.
Quite often, folks interested in purchasing a home lack the 20% down payment often required from the lender. Provided the seller has established equity of the home, there are other options for the buy and sale agreement. Seller financed mortgages are the most frequent alternative mortgage option exercised; seller financed mortgages however, are not the only option that can be considered. In this article, we’re going to take a look at some of the option mortgage options that are rarely exercised, but that do provide tremendous advantage to the buyer and seller.
As a seller, the conditions must be present that allow you to offer the buyer alternative options. Your mortgage balance must be considerably less than the fair market sale price or your hands are basically tied. Imagine a scenario: you're ready to sell your home, the buyer is ready to purchase your home, and they simply do not have a 20% down payment. What they do have is a 5% down payment, and the aspiration to work with the seller and the mortgage lender. You're asking price for the home is $80,000 and the appraised value of the home is $85,000; your existing mortgage is $50,000 and the lender requires the proposed buyer to provide a $16,000 down payment. How can a solution be reached? If you, as the seller are eager to take a second lien on the property, there is a feasible solution. The fact that the house appraises for more than the asking price, automatically provides the buyers with a $5,000 level of equity, so they only need $11,000 more to reach a 20% down payment. They have $4000; in order to accommodate the buyers, you could accept $74,000 in upfront mortgage money from the lender, and take a second lien on the $6000 difference. This method works only if you’re willing to take the second lien, and the buyers are credible and reputable folks.
Taking second liens or second mortgages are growing in popularity as a means to sale increasing value real estate in today's rapidly growing market. There are other spins offs from the basic formula described, however the scenario above is the most common and provides the buyer and seller with the basis for growing with creative add- ons. Of course, the seller financed mortgage is still the meat and potatoes of the alternative financing business.
How does the seller financed mortgage work? Generally, it works in this manner: if the seller owns the house outright he or she may decide to finance a mortgage for the buyer, and set up an amortized loan. Thanks to the readily available personal computer, loans can be constructed that would have only be accessible via an accountant or lending institution, 20 years ago.
Of course, how you make a decision as a buyer or seller to ultimately close a deal, will depend on many factors, this may be just one of the more important aspects. How well you know each other, credit ratings, and the dollar value of the mortgage will also influence your decision.
In spite of of the final decision, the opportunity exists to explore other avenue other than the traditional mortgage lending institutions, or mortgage companies. And, from time to time, you never know, the deal from the seller financed mortgage may open more options than just a mortgage for homeownership!
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
Disclaimer:
The general information provided by http://MortgagePalace.blogspot.com is intended as an educational purpose only, and should not be interpreted as legal advice. The law varies drastically by location and legal specialty, and http://MortgagePalace.blogspot.com makes no promises about the accuracy or completeness of the information provided. You should not rely on our information when making legal decisions. We recommend that you consult with a lawyer to get professional legal advice on how best to deal with your situation.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
** Attn Ezine editors / Site owners **
Feel free to reprint this article in its entirety in your ezine, blog, autoresponder, or on your site so long as you put a link back to this original post, leave all links in place, and do not modify the content in anyway.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
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