What every home buyer needs to know about...
How to buy the house you really want
Seller financing is a very powerful tool that you can use to buy the house
you really want.
How? Very simply, you can buy a better house if you can reduce the number of
obstacles in the home buying process. One way to streamline your move
is to work with a home seller who will offer seller financing.
Once you have come to an agreement with a seller, you can reduce
the amount of time until you own your home because
you and the seller
are in control of the due dilligence process -- not some bank that is
handling hundreds or thousands of loans.
When you show a person or a couple how they can help you buy their house, you make
your offer more attractive to them, and you open your opportunities to choose from more
houses.
There are many people who can not, or will not, approach a lender or a mortgage
broker for conventional financing. Let's explore
some of the reasons for this.
Financial health
Many people cannot qualify for a traditional mortgage due to a poor credit history,
insufficient assets to make a down payment, or too much current debt. Certainly,
this area is the primary reason why people consider creative financing. It is
important to understand, however, that seller financing cannot work miracles.
If there is a very good reason why an established bank will not offer you a loan,
a home seller probably has even more to lose by considering it. Seller
financing works in marginal cases, when the numbers are "close", but not close
enough for a banker's liking.
What's "close"? The home seller and you need to exercize good judgement here,
and we strongly recommend that you and he/she/they seek the advise of a
real estate attorney or a financial advisor.
Because points and origination fees are typically not charged,
you can earmark more of your savings towards the down payment.
Life Changes
Traditional lenders look at your recent position in life,
and they don't like to see changes. If you're new to the
area, or changed jobs, or were recently divorced, or
started a new business out on your own, etc.,
this could affect a loan application. Whether this is
fair or not is another question, but unfortunately it's
the way things are.
Privacy
More and more Americans are becoming concerned with the issues of
privacy.
Credit bureaus, mortgage lenders, and federal and local governments are all
learning more and more about each and every one of us. Some of us feel that
we've had enough, and don't want to open our life story bare to a long series of
nameless, faceless bank clerks and officials. (Ask anyone who has had to qualify
for a conventional mortgage; it's no fun!)
Laws and Policies
Many people who wish to buy American property aren't necessarily citizens of the
U.S. Lending institution policies may make it difficult or impossible for you to buy
property with traditional financing. You may encounter people who have an opinion
as to whom they want to sell their home, but take heart that many of us simply don't
care, as long
as we're able to make the sale. Just consider the opportunities that occur when
people are encouraged to look beyond local borders! As more and more properties
are marketed
on the Internet, this issue will become more and more relevant.
Another example of how law or policy can affect buyers concerns people who invest
in real estate on a regular basis. As an investor, you may have an excellent
credit record, as well as the necessary assets to buy a house, yet certain
categories of loans (such as the FHA) restrict the number of times that their
program can be used. If you fall into this category, it can often present the perfect
situation for you to consider seller financing.
By the way, we are intentionally being vague with our reference to "law" and
"policy". Lending institutions are usually independent companies, either publically
traded or privately held. Their policies are often dictated by the parameters used
to insure or sell groups of mortgage loans, and these parameters are set by the
governmental bodies. Thus, even flexible companies need to think about the
requirements established by the government when they make their loan decisions.
Other advantages
Once you have identified a suitable house to buy, you can schedule a
closing a month or two earlier if you don't go through a bank, and the overall
closing costs can often be reduced.
Conclusion
You can streamline the home buying process by working with sellers who
offer seller financing, and this can help you buy
the house you really want!
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