Today, there are many opportunities for seller financing if the seller does not need the equity in their home to buy a new home.
When the owner has no mortgage on their house
The owner can chose to act like the bank and provide the mortgage holding the deed on the house as collateral, requiring a down payment and financing a portion of the purchase price over a fixed term with a ballon payment due at the end of the term. This gives buyers the opportunity to get their credit repaired or to live in the home until their income rises to the point where they can qualify for a conventional loan to replace the home owner's loan or the home owner can extend the loan for as long as the home owner wishes.
When the owner has a low payment on their loan
1. The owner can also chose to provide a lease option, where he will grant the home buyer the opportunity to lease the house now and buy it at a later date.
2. The owner can also chose to provide a lease purchase where the owner sells the house to the buyer holding the deed as collateral, leasing the house to the buyer until a specific date where the buyer must present the required cash to purchased the house. To sweeten the deal, some sellers will apply a portion of the rent towards the purchase of the house. This provides cash flow for the home seller, income, and a buyer down the road. It is not an empty house waiting to be sold and the seller has very few risks.
Vacation homes and second homes
More and more people are partnering with friends to buy second homes. Sometimes 3 and 4 couples are buying a vacation place, spreading the costs yet having the availability and personal space while also having less risk and the opportunity for the benefit of the increase in value over time. I have worked with parents and children and brothers and sisters who have done this. It makes that second place more affordable for everyone.
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