Why List with Owner Financing?
You may not know this, but the majority of homes that offer Owner Financing are sold at list price. This is due to the seller offering a service that has a premium built into the listing. By offering Owner Financing the seller is allowing the buyer to “piggy back” on his/her credit for a specific period of time, and reap the benefits of appreciation over that period of time. Once the “call” is executed, the seller is released of his/her obligation to the underlying lien holder and the buyer takes sole ownership. When the seller is offering owner financing on a home, he/she... Read more »
Highest First Quarter Sales Since 2008
Albuquerque, NM, April 23, 2012 – 1st Quarter 2012 single-family home sales increased 11.75% from 1st Quarter 2012, also making it the highest year over year 1st Quarter gain in home sales since 2008. Average sale prices saw a 6.26% reduction from 1st Quarter 2011 while the median price saw a 3.61% drop from the same period. “The real estate market is ready for good news,” said Marc Guggino, President of the Greater Albuquerque Association of REALTORS®, “and this is the third consecutive quarter that sales have improved over the same quarter the prior year” “Supply... Read more »
Rising Rates = Rising Real Estate Contracts
We all know what is coming down the pipe. Rates will rise in the future. This is going to be interesting for individuals that are selling their homes and have potential buyers that are not able to qualify due to “debt to income” ratio issues. When mortgage rates increase more and more buyers are limited to the amount of home that they are able to purchase via a traditional lending institution, because the money that they are borrowing is going to cost more. Owner Financing can offer a potential home owner the opportunity to purchase a home that they desire vs. a home that they are forced... Read more »
Escrowing the Difference
If the sellers payment is going to be more than the payment on the real estate contract due to the amount financed or the REC having a lower interest rate then that of the senior lein, the difference can be held in escrow and distributed on a monthly basis. In addition, the difference between the payoff of the REC and that of the senior lein can be added to this amount and held in escrow until payoff to ensure that the seller will be able to allow the buyer to complete the refinance of the Real Estate Contarct. Read more »
Insurance – Double Coverage
The REC (or mortgage or deed of trust) between the seller and the purchaser requires the purchaser to maintain hazard insurance for the benefit of the seller. The purchaser can satisfy this requirement by obtaining a homeowner’s policy, and naming the seller in the policy as a “loss payee”. He could also be required by the financing instrument to name the holder of the first mortgage as a loss payee under his policy, and increase the insurance amount to a figure large enough to cover the mortgagee’s interest Read more »
Buyer Representation – IMPORTANT!
He is absolutely correct. You (the buyer) need to have representation that is knowledgeable with Real Estate Contracts. We at ABQ-OwnerFinancing.com are dedicated Buyer Brokers with finance backgrounds in addition to being Licensed Realtors. When using a Real Estate Contract as a financial instrument, you only get one chance to get it right. Call us for your free, no cost no obligation, consultation TODAY! Read more »
Default – Not a good thing….
The following acts or omissions of the buyer are declared by the standard RANM form to be events of default, for which the seller may pursue his remedies: · failure to make payments on the debt to the seller as required by the contract; · failure to make payments on an assumed obligation in accordance with its terms; · failure to pay property taxes or other assessments as they become due; · failure to reimburse seller for payment of delinquent taxes; · failure to maintain hazard insurance as required by the contract; · failure to reimburse seller for insurance premiums advanced to protect... Read more »
Negative Amortization – Its exactly that!
When you make payments on a Real Estate Contract based on a schedule, such as a 30 year amortization, a portion of your payment will go toward principal and a portion toward interest. This is known as a P&I payment. In addition to your P&I payment, most times you will add 1/12 of the annual tax bill and 1/12 of the annual hazard insurance premium to the monthly P&I payment. These 4 items will comprise your monthly payment obligation to the seller, which is paid through Escrow. Where Negative Amortization becomes a factor, is when you have selected to pay the seller a lower payment... Read more »
Additional Principal Payments
When you purchase on a Real Estate Contract, it is important to understand that the Contract that the seller is holding is an entirely free standing note with its own terms and conditions. When you make a payment on this note a portion of your payment goes to principal and to interest based on an amortization schedule agreed upon by you and the seller. The underlying obligation that the Seller has to maintain (paid through escrow) is amortized based on the terms and conditions that the Seller has agreed upon with the bank. When you purchase with Owner Financing and make additional payments to the... Read more »
Seller Motivation – You Would Be Surprised
There are many reasons a Seller may be offering Owner Financing on a Property. They may own the property outright and the thought of getting a 5%-10% return on their investment is motivation. They may have enough equity in the property, and rather then refinance the home to get to that equity, they are able to take the Down Payment and do what they need to do. In some circumstances though the picture may not be as colorful. Often the Sellers of the home have been on the market for a substantial amount of time, and the the showings/inquiries have dried up completely. By offering Owner Financing,... Read more »
