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418 viewsOwner Financing - Friend or Enemy
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Owner Financing - Friend or Enemy
The next buzzword on the horizon is "owner financing". For potential homeowners this is one to pay attention to. Here is the game in a nutshell. First banks make home financing a more difficult event than a bar exam. Then the government decides to buy mortgage notes under the assumption that the market will recover and in 5 - 10 years the mortgages will yield a profit for them. Next a large number of savvy hedge managers decide that what good for the government is good for the gander.
And now the final result...... In the last quarter of 2008 record numbers are created that will also buy mortgages.
This is great for home buyers because you can now get financing for your new home without using a bank. When a person is selling their home they can offer you owner financing at a decent interest rate. You will give them a down payment and an IOU in exchange for the title to your new house. The homeowner can then sell that IOU to a large hedge fund. This is now happening the same day as the closing.
Good, bad, ugly. The good is that the hedge fund determines buyer qualification and not the bank. As a home buyer you don't have to jump through the same hoops as qualifying for a bank. I work with a fund that allows home buying scores down to 500 on purchased notes with interest rates from 6.99 - 8.5%.
I hope to see many potential buyers take advantage of this. Even if a seller does not know how this could work you can make them aware.
Owner financing in the near future will make the homebuying process easier. This same thing happened in the early 80's when it was imposible to get a loan also. It is a great concept.
For info on how to sell your home faster with owner financing contact us.
Darryl Joyner - Real Estate Agent
Island Advantage Realty
646-321-6395
The next buzzword on the horizon is "owner financing". For potential homeowners this is one to pay attention to. Here is the game in a nutshell. First banks make home financing a more difficult event than a bar exam. Then the government decides to buy mortgage notes under the assumption that the market will recover and in 5 - 10 years the mortgages will yield a profit for them. Next a large number of savvy hedge managers decide that what good for the government is good for the gander.
And now the final result...... In the last quarter of 2008 record numbers are created that will also buy mortgages.
This is great for home buyers because you can now get financing for your new home without using a bank. When a person is selling their home they can offer you owner financing at a decent interest rate. You will give them a down payment and an IOU in exchange for the title to your new house. The homeowner can then sell that IOU to a large hedge fund. This is now happening the same day as the closing.
Good, bad, ugly. The good is that the hedge fund determines buyer qualification and not the bank. As a home buyer you don't have to jump through the same hoops as qualifying for a bank. I work with a fund that allows home buying scores down to 500 on purchased notes with interest rates from 6.99 - 8.5%.
I hope to see many potential buyers take advantage of this. Even if a seller does not know how this could work you can make them aware.
Owner financing in the near future will make the homebuying process easier. This same thing happened in the early 80's when it was imposible to get a loan also. It is a great concept.
For info on how to sell your home faster with owner financing contact us.
Darryl Joyner - Real Estate Agent
Island Advantage Realty
646-321-6395
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Comments
1. Seller selects the hedgefund as a first priority. The fund must be well capitalized and stable.
2. The fund will publish the criteria that the IOU must meet. This will include the minimum fico score of the buyer, the minimum down payment, the value of the property compared to the IOU amount, the income of the buyer and a few other things. The seller must use this information to screen potential buyers.
3. After the buyer meets the published criteria the IOU is drafted and the seller must receive the pre-approval by the fund before closing takes place.
If at any time before the closing the fund backs out = NO DEAL.
All of this is done before the seller commits to accepting the IOU. This guarantees that they can sell it to the hedge fund. (end buyer)
2. NYCMortgagehelp.com - is a popular hedge fund
Thanks.......