Buy, Sell, or Finance
Everyone is in one of the three categories above, they are either trying to buy, trying to sell, or desire to earn a higher interest income off of real estate than they can earn in a bank account. Each one requires a bit of knowledge in order to not lose money in the deal.
Everyone wants to own a home but today it is more difficult than it was a few years ago. The good thing is a buyer’s market has developed and you can expect to get a better price on a home, although you may not be able to get the financing. So here is the dilemma; how to finance a home, but not in a traditional way. Here is a short list of alternatives to going to the bank:
1. Seller Financing – There are many property owners who wish to sell but have a hard time finding a buy willing to pay a higher price, or willing to put down 20% at the bank. Since the seller already owns the property, they may as well hold the note and sell it for less down, placing your down-payment in their pocket rather than the bank’s. The interest is usually a little higher this way but lower closing costs can be a big help! You can always refinance later.
2. Private Lending – Similar to Seller Finance but now the financing is done through a 3rd party rather than the owner. There are groups of investors who like this kind of business and are willing to use the property as collateral. One common group you can find on the web are Hard Money Lenders. Just search for them. Be careful, they can be like high interest credit cards, which you do not want. However, if you are willing to pay a little more in interest and look for good terms you should be able to find a lender.
3. Savings and Loan & Credit Unions – many people overlook these because they are used to regular banking. In reality, these institutions often offer accounts to people who are in their geographic area. You should check them out. When banks don’t want deposits and loans, these institutions often do, and they tend to have more flexibility. Where you may not qualify for FHA at the moment, you may qualify easier at your local Credit Union.
4. Family – some people avoid family for business. In this case it isn’t business as much as it is a necessity. Since homes are the collateral for a mortgage, family should not be afraid to help each other make a home purchase. In the worst case the property can always be sold to cover the loan. The main thing is to make sure you are buying at a fair price and in a place where the property is likely to maintain market demand.
The whole point is to find a creative way to make your purchase, this is after all, a business and financial opportunity.