Sometimes a buyer wants to buy a home and has good enough credit to purchase the home, but is short some of the cash that the lending institution will require to close the loan. In cases like this, the Seller can hold a note for some of the cash and secure it as a secondary lien on the home. When this is done, we refer to the Seller's second a Purchase Money Mortgage.
From the Seller's standpoint, the Seller is acting just like a bank. The Seller is lending some (or all) of his equity in the home to the buyer in order to facilitate a sale. Typically, the Seller is only lending a small amount of money (compared to the value of the home) so another lender is required to bring the bulk of the money required to close on the home. That lender will be in the first mortgage position while the Seller's purchase money mortgage will be recorded in the second mortgage position.
Let's consider an example on how this could work.
Mr. and Mrs. Smith would like to buy a Tallahassee home. They find that Mr. and Mrs. Jones have the perfect home for sale in Tallahassee and it is priced at $250,000. The Smith's go to the bank and discover that the bank will lend them $200,000 to purchase the home, all the Smiths need to do is invest $50,000 ($250,000 price - $200,000 loan = $50,000 down payment).
The Smiths look at all of their sources of money and discover that they can only raise $35,000, leaving them $15,000 short. So, working with an excellent and creative Realtor in Tallahassee, they make the following offer:
Tallahassee home for sale
Purchase Price $250,000
New First Mortgage (Bank) $200,000
Purchase Money Mortgage $15,000
Cash Due At Closing $35,000
At closing, the Smiths get $235,000 as well as a note from the Joneses for $15,000.
This creative solution is simple and creates a larger market for the Smith Home. Rather than have to lower their price to attract more buyers, the Smiths have attracted more buyers by making the house more affordable (not only to people with large cash reserves).
I'm sure that many readers wonder why $15,000, held as a second mortgage, brings this home to the forefront of the market. The key is cash. Many strong home buyers are strapped for cash and this little bit of help makes all the difference in the world. With so many homes on the market, one that is equipped with a $15,000 loan certainly stands out from the crowd. Don't be afraid to try any creative ideas to get your home sold in today's tough real estate market.
In today's market, Tallahassee homeowners need to consider all the creative solutions possible to sell a Tallahassee home.
Owner Financing Homes For Sale
One of the best ways to attract buyers is by offering buyers owner financing. National statistics show that sellers offering owner financing attract three times the number of potential buyers. With three times the buyers, it's more likely that you'll sell your home faster.
The reason this method works so well is because many people are scare to fill a mortgage application or have been turned down in the past for a loan and don't want to repeat the same experience.
However, there are some disadvantages when using owner financing. The main problem has been that it forces the seller of the home to hold a note for a long period of time. Since most people need the money to get into a new home, the owner financing option has not been a realistic solution for people needing to sell their home quickly.
However, to go around this problem you can simply contact a note buyer in your area and set it up so that the note buyer will buy the note you just created at the point of closing. Usually, you'll end up getting about 91% of the value of the home. Although this may seem as a big discount, you need to realize that by offering owner financing, you'll sell your home sooner and for a higher prices since there will be more people interested.
To find local note buyers, you can do a local search using Google.com. After you get a few numbers, call them and ask them a few questions such as:
- Do they buy residential notes?
- How much seasoning must the notes have? (How long has it been from the creation of the note to date?)
- What kind of discount do they offer?
To find more information, please go to http://miamimortgagehome.com/For_Sale_By_Owner.html or email igorbuces@gmail.com .
Both Joe Manausa & Igor_buces are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Joe Manausa has sinced written about articles on various topics from Sell Home, Real Estate and Sell Home. Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the or on t. Joe Manausa's top article generates over 4400 views. to your Favourites.
Igor_buces has sinced written about articles on various topics from . To find more information, please visit http://miamimortgagehome.com/For_Sale_By_Owner.html or email him at igorbuces@gmail.com.. Igor_buces's top article . to your Favourites.
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