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Seller Financing as a Home Buying Option May Make the Difference



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By : marco benavides    99 or more times read
Even though the real estate market has been slowly coming out of its prolonged slump, there are still many more homes for sale than there are buyers. In addition, there will be more homes available as the foreclosure cycle is completed and the market rebounds completely. This makes it a perfect time for buyers to consider a home purchase because financing terms are actually very good if they have good credit scores.

The lack of buyers and movement in the market has led homeowners to consider seller financing as a way to entice buyers. While there are not many homeowners who will consider seller financing, only about ten percent do, a buyer who looks around is bound to come upon one out of these ten homeowners. The more looking around that you do, the more people you may find who are willing to consider this type of financing.

Since the market continues in a slow trend, a seller may be able to move a home faster and even get a pretty good return because of the interest rate that he/she will collect during the period of the loan. Buyers should consider that seller financing is not an easy thing to do, and that there are logistical, financial and legal risks and hurdles that must be overcome.

Because of the risks and hurdles involved, sellers may be less likely to want to get involved in financing. On the other hand, both parties can take precautions so that the risk involved will be less to both parties. If there are earnest negotiations, an agreement can be reached that actually helps both parties. If a buyer is too insistent in getting his/her way, the deal may not be consummated.

The deal is actually fairly straightforward and consists of the seller extending credit to the seller in the amount of the price of the house, but the down payment must be deducted. Both parties will then sign a promissory note or contract, containing the interest rate to be charged and other terms of the loan, and it is then recorded at the county records office.

Negotiating is crucial in this endeavor to try to obtain beneficial interest rates. Both parties should check what the interest rates are in the area so that an agreement can be reached. The buyer should also negotiate the price of the house, and do not forget to have a home inspection done, and to make the deal contingent upon the home inspection.

As a buyer, you should expect for the owner to be thorough and to ask you for information regarding your credit, employment, earnings, finances, etc. It may not be all that different than what the bank might do, although it may be a bit less formal. However, background information as well as credit reports can be easily obtained online, and you should keep that in mind if you are asked to submit a home loan application. Hopefully, things will go smoothly, both parties will come to an agreement, and the home purchase will be made through seller financing.
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