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Advantages for the buyer in an Owner Financed Home purchase.

Despite the elevated purchase price and higher interest rate, there are many benefits to a buyer who engages in an installment sale transaction.

1. Easy Qualification. The buyer, in many cases, prefers an installment sale to conventional financing because it does not require traditional bank income and credit approval. The buyer may have poor credit because of a divorce or recent bankruptcy. He may be self-employed and cannot prove income. He may be new to his job and cannot meet strict lender guidelines.

Even if he could qualify for a loan, the rate will be astronomical if he has poor credit. Furthermore, few conventional lenders offer fixed interest rate loans to people with a poor credit rating.

As you can see, there are dozens of reasons why a buyer cannot (or will not) qualify for a conventional bank loan. The installment sale becomes the perfect solution for him.

2. Credit Rating. An installment sale may give the buyer a chance to improve his credit rating by owning a home and making payments timely.

3. No Loan Costs. One of the biggest benefits for the buyer is not having to pay the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, title insurance and the plethora of other “junk” fees charged by conventional lenders can amount to thousands of dollars at closing. The buyer is free from these with an owner-carry installment sale.

4. Fast Closing. A buyer can close and move into a property within days, since there is no third party lender holding up the transaction.

You and your spouse hold steady jobs and you have both had those jobs for over two years. You don’t have a house to sell to move into a new house, you have perfect credit and a down payment to boot! So nothing should be holding you back on buying your dream home should it? Real estate broker’s hands are tied in today’s market. They are struggling to get even the “textbook” buyer a home loan.

Today’s unique real estate market situation calls for a unique solution. A solution that protects both the buyer and the seller. The seller gets the full asking price for the property. In exchange, the seller retains the mortgage for a period of time. The buyer assumes the payments (mortgage, taxes and insurance) when moving into the property. Further, the buyer assumes maintenance of the property. Both the buyer and the seller become part of a holding company, called the trust. This becomes a business arrangement, which requires the buyer to perform fully and properly. At the conclusion of a specified time, the buyer then obtains a conventional mortgage on the property they have been living in during the specified time, at the price agreed-upon, when the trust was created.

This provides the buyer a “track record” towards qualifying for a mortgage. The seller knows they are getting their asking price, and is relieved of the burden of the expenses associated with property, now.

There are other advantages to both the buyer and the seller for utilizing this time-limited trust arrangement. The key point for the buyer and seller is they can move NOW, and each party’s interests are protected. While the trust does have finite time duration, it does provide some “breathing room” and certainty to both partners in these difficult times.

To learn more about Owner Financing and the many benefits it has to both buyers and sellers in today’s real estate market, please visit our blog at:

http://www. AustinOwnerFinancedHomes. com

http://www. GreatHomesTexas. com

A wrap-around mortgage, more-commonly known as a “wrap”, is a form of Owner Financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around and exists in addition to any superior mortgages already secured by the property. Under a wrap, a seller accepts a secured promissory note from the buyer for the amount due on the underlying mortgage plus an amount up to the remaining purchase money balance.

The new purchaser makes monthly payments to the seller, who is then responsible for making the payments to the underlying mortgagee(s). Should the new purchaser default on those payments, the seller then has the right of foreclosure to recapture the subject property.

Because wraps are a form of Owner Financing, they have the effect of lowering the barriers to ownership of real property; they also can expedite the process of purchasing a home.

An example:

The seller, who has the original mortgage sells his home with the existing first mortgage in place and a second mortgage which he “carries back” from the buyer. The mortgage he takes from the buyer is for the amount of the first mortgage plus a negotiated amount less than or up to the sales price, minus any down payment and closing costs. The monthly payments are made by the buyer to the seller, who then continues to pay the first mortgage with the proceeds. When the buyer either sells or refinances the property, all mortgages are paid off in full, with the seller entitled to the difference in the payoff of the wrap and any underlying loan payoffs.

Typically, the seller also charges a spread. For example, a seller may have a mortgage at 6% and sell the property at a rate of 7% on a wraparound mortgage. He then would be making a 1% spread on the payments each month (roughly, anyway. The difference in principal amounts and amortization schedules will affect the actual spread made).

As title is actually transferred from seller to buyer, wraparound mortgage transactions will violate the due-on-sale clause of the underlying mortgage, if such a clause is present.

For more info, visit: http://www. greathomestexas. com

You can buy a home with no credit check and actually own it! On an owner financed home purchase you get the deed at closing similar to if a bank had loaned you the money. Below are some details of the various programs available to people with less than perfect credit.

Rent to own – is just like it implies you do not own the property until you have made the very last payment so if you did a rent to own for 30 years it means it would not be yours until 360 payments (It will not be in your name until the 360th payment is made!!) have been made and guess what if you miss or are late on even one payment in most cases it reverts to renting with no chance of it being yours even if the remaining payments were made on time. You are a RENTER until the last payment is made!!

Lease option – Similar to a rent to own but here you are basically signing an agreement to buy the property at some future date. In the meantime you are paying a hefty “deposit” which is usually not refundable should you decide not to buy. This is a way for the landlord to get down payment benefits of a purchase on what is actually closer to a rental. If you do not exercise your lease option to buy you could lose both your deposit (lease option fee) as well as any payment credits.

Contract for deed – This is very similar to a rent to own. The difference is that on a contract for deed you have a purchase contract similar to that of a rent to own but here you get a promise for the deed to go in your name once all payments are made and you get very few real ownership benefits if any. Many states do not allow a contract for deed transaction or have heavy restrictions on the transaction but terms on these are usually pathetic. High interest rates and consequently high payments are common. Do your homework and rely on professionals other than just those trying to sell you the home.

Owner Financing is the way to own a home and without all the problems mentioned above. This is when a seller or owner of the home lets you pay them over time instead of requiring you to get a mortgage with a bank. You can buy Owner Financed homes and own the property immediately. This is fast becoming the most efficient, economical way for people with good bad or no credit to purchase a home.

Since Owner Financing doesn’t rely on your credit score, the purchase of your new home can be completed very quickly. Sometimes, the process can be completed in as little as a few days. You can also get good interest rates and a low down payment. Always consult a competent attorney to help you navigate through this simple process and before you know it you will own the home of your dreams with Owner Financing and NO credit check!

Qualifying for a home loan is the most common impediment to buying a house, which is why we offer the easy and fast Owner Financed home buying solution. Although, there comes a time when you will need to qualify through a bank to refinance your Owner Financed home. The Owner Finance specialists at Forte Properties help you with rebuilding your credit and will also give you the tools needed to do so. It is never too early to start! Here are some things you can do to prepare and give yourself the best chance of being able to refinance when the time comes.

1. Check your credit history. There are many sites you can go to and obtain your credit reports from all 3 credit bureaus such as FreeCreditReport. com. Look it over and see if there are any errors or out-of-date negative entries. If so, file a dispute form and get them removed before applying for a home loan. Are there any charge-offs or past-due accounts? If so, contact the lenders and try to make a deal to have those entries brought current or removed entirely. Again, do this before applying for a home loan.

2. Do you have several credit card accounts that are open? Close all but one account and wait for the closures to be reflected on your credit history. Only then should you apply for your home loan! Too much outstanding credit (or the potential to create it i. e. open accounts with $0 balances) is a huge red flag for mortgage lenders. Try to save up a down-payment of at least 20% of the amount you intend to borrow. The more you have available for the down-payment, the easier it will be to qualify for a home loan and get the most favorable terms.

3. Be realistic when predicting the size of the home loan that you’ll qualify for taking into consideration your income, credit status, and the amount of your down-payment. If you try to buy “too much” house, you’ll likely end up being disappointed.

Conclusion: Preparing yourself to be able to refinance your Owner Financed home doesn’t have to be an impossible task. With a little preparation and patience, it will happen!

Benefits for the Seller with with Owner Financing in Austin, TX

As the real estate market begins to dip, sellers will need to find more creative ways to sell their home. One of the major problems in today’s real estate market is the lack of financing vehicles available to buyers. Buyers with good to average credit find it harder and harder to get approved for the amount of money they would like at an interest rate that they feel comfortable with. Seller financing provides an easy bridge to close a buyer’s financing gap. In many cases, the seller can have most of his needs satisfied by an Owner FInance sale rather than a traditional cash sale. Let’s look at these needs one by one.

1. Highest Price. There is no doubt that a seller can insist on and receive the highest price when offering flexible Owner Financing terms. In many cases, the seller can receive more than the fair market value of the property by offering these “soft” terms. People are always willing to pay a premium for non-qualifying financing.

2. Cash. Nearly ever seller says he wants all cash, but few need it. What the typical seller wants is the most net cash from the deal. Often, the seller has to pay closing costs, title insurance, broker fees and the balance of the existing financing. In addition, there may be capital gains tax due to Uncle Sam. In many cases, the sale of a property by an installment sale (particularly a “wraparound”) will net the seller more future yield than any source from which the cash proceeds were reinvested.

3. Fast Closing. Nothing holds up a sale more than new lender financing. In some areas of the country, it can take months for a buyer to qualify and close a new loan to purchase your property. Since most standard real estate contracts contain a financing contingency, you may end up back at square one if your buyer does not qualify. Furthermore, if your house is not particularly nice or unique, it may take you some time to even find an interested buyer. Since you are competing with all of the other houses for sale, you may need to spend thousands of dollars in paint, new carpet and landscaping just getting the house ready for the market.

In down markets sellers need to use every tool available to sell their home quickly. Quicker sales tend to be more profitable and provide less headaches then chasing a down markets. Owner financing can give sellers the advantage they need to overcome a key purchasing hurdle, opening their property up to more potential buyers.