Creative financing

There are benefits with creative financing for both buyers & sellers. Creative financing is becoming more and more popular to increase the opportunities each party has. With home prices being low, and inventory decreasing, home owners are expanding buyer ’s options when it comes to buying a home. Is this the opportunity you have been waiting for?

When part or all of the purchase price, less the buyer ’s
down payment, is carried by the seller, the seller is
providing owner financing. It doesn ’t matter if the
property has an existing loan, except to the extent that
the existing lender might accelerate the loan upon sale
due to an alienation clause. Instead of going to the bank,
the buyer gives a financing instrument to the seller as
evidence of the loan and makes payments to the seller. If
the property is free and clear, meaning the seller has clear
title without any loans, the seller might agree to carry all
the financing. In that instance, the buyer and seller agree
upon an interest rate, monthly payment amount and term
of the loan, and the buyer pays the seller for the seller ’s equity
on an installment basis. The security instrument is generally
recorded in the public records, which protects both parties.
“ Owner Financing in Real Estate: Buying a Home With Owner Financing”. By Elizabeth Weintraub About.com 1.22.12

Most purchase-money transactions are negotiable. Sellers and buyers are free to negotiate the terms of the owner financing, subject to usury laws and other state-specific regulations. While there is no standard down payment required, many sellers want a sufficient down payment to protect their equity. Down payments can vary from little to 30% or more. Sellers feel their equity is safeguarded by the buyer ’s down payment because buyers are less likely to go into foreclosure if they’re invested a lot of money upfront.

Land Contracts
Promissory Notes & Mortgages
Lease Purchase Agreements

Do not pass legal title to the buyer, but give the buyer equitable title. The buyer makes payments to the seller for a certain period. Upon final payment or a refinance, the buyer receives the deed.

Sellers can carry the mortgage for the entire balance of the purchase price (less the down payment), which may include an underlying loan. This type of financing is called an "all-inclusive mortgage" or "all-inclusive trust deed" (AITD). The seller receives an override of interest on the underlying loan. A seller may also carry a junior mortgage, in which case, the buyer would take title subject to the existing loan or obtain a new first mortgage. The buyer receives a deed and gives the seller a second mortgage for the balance of the purchase price, less the down payment and first mortgage amount.

Selling on a lease purchase agreement means the seller is giving the buyer equitable title and leasing the property to the buyer. Upon fulfillment of the lease purchase agreement, the buyer receives title and typically obtains a loan to pay the seller, after receiving credit for all or part of the rental payments toward the purchase price.

Little or No Qualifying
Tailored Financing
Down Payment Flexibility
Lower Closing Costs
Faster Possession

Higher Sales Price
Tax Breaks
Monthly Income
Higher Interest Rates
Shorter Listing Term

Are you sick of renting and would like to settle down in YOUR own home?
For Buyers who are unable to mortgage due to a short sale or foreclosure, one of these options may be a good idea for you.
Please contact Megan Schaff @ 602.320.6685 for more information and to see what available homes qualify for these options.
You know you need to sell, but are nervous you are going to lose too much money selling your home in this economy.
Contact Katie Halle @ 480.250.0023 to discuss your options as a seller.
www.scottsdalepropertyfinder.com

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Creative financing

by Katie Halle with Team Evolution and West USA Realty on Feb 04, 2012

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