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Financing Road Less Traveled
Over time, the availability of credit in the United States has grown and more and more people nowadays are able to take out lines of credit with little or no effort. There are certainly some ramifications to that, but one of the positive results of the country’s credit explosion has been the proliferation of financing options for prospective buyers that stray from the traditional 80 percent financed, 20 percent down framework.
Indeed, there now exists an almost endless supply of special loan types and programs to enroll in that will net you a home under financing terms that probably were not seen 30 years ago. Naturally, there are both good and bad ways to finance a particular piece of real estate, but getting familiar with the various options open to you is a great way to start thinking about pursuing the purchasing process.
Here are a few of the ways out there that you can finance a home in a way that is specific to your financial situation, one that might not fit the traditional method of financing a new home.
No Doc Loans
It seems perhaps unthinkable that a bank would extend you a loan without so much as asking you what you do for a living, but no doc and low doc loans have grown in popularity for those with cash to spend but the credit history that won’t let them get traditional financing. No doc loans have a higher down payment requirement, but the ability to get a loan with bad credit can sometimes offset that cost.
Seller financing has grown in popularity as the mystery around it has dissipated and sellers are seeing it more and more as a solid financial investment to offer financing on homes for sale. The typical use for seller financing comes when a bank will offer a loan to a particular home buyer for some, but not all of the purchase price of the Richland WA real estate.
The seller would then enter into a personal financial loan agreement with the buyer for the rest, giving the seller a chunk of money up front from the bank and a steady stream of interest-bearing income from the buyer. The buyer gets into the home, the bank does not over extend itself and everyone gets what they want out of the transaction. These types of deals are also growing in popularity and could be a way to solve your financing difficulties.
These types of deals can come under many names depending on the region you live in, but the basic gist of the deal is that a prospective home buyer makes payments directly to the seller on agreed-to terms instead of the bank, only taking title when those payments are complete. While land contracts function somewhat like seller financing, seller financing agreements rarely make up the entirety of the financing and title is passed at the onset of the agreement.
Land contracts give sellers the ability to see return on what is basically invested money in the form of their real estate with the security of still holding title should anything happen along the payment schedule. These deals are sometimes called contract-for-sale deals in some areas of the country and you should consult a real estate agent or attorney before entering into such an agreement, either buyer or seller.
Of course, you should always consult your real estate advisers, whether that entails a real estate agent, real estate lawyer or other counsel, before entering into any financial agreement that you may not completely understand. There are many more financing options out there, but arming yourself with information on a few of the options will ease your real estate financing search and give you a better foundation from which to mount your purchasing effort.
Call us, 509.438.9344, Email us, or fill out the contact form below.
We respond right away! -Colleen & Joe Lane, Realtors®
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