Create Your Own Home Buyer Financing

If you are trying to sell a property right now your home buyer financing can be a very big deal. If you are buying a property it's time to move full speed ahead! Even with the current real estate financing climate, now is definitely the time to buy real estate! Don't get left in the starting gate.

Just because traditional home mortgage lenders are not as cooperative as they may have been in years past, this is a simple reminder that you do have other options. How many times have you heard someone say, "necessity is the mother of invention"?

In the situations home sellers and home buyers find themselves in right now, it is good to know that financing your buyer may not be as difficult as you may have thought.

Just consider what the home mortgage lenders have been pushing on consumers for many years now. How about loan packages for the least credit worthy among us that include "No Money Down", "No Credit Check", and "No Income Verification" loans? Those terms are the epitaph of many one time sub prime lenders.

Another one of my favorite quotes is, "when the going gets tough, the tough get going". In such situations we need to regroup, refocus, and get back to basics. Here's what's interesting. The home mortgage lenders have strayed from the course of the so-called "basic fundamentals" of loan underwriting. While it was for many a very exciting ride, they are now being forced to get back to basics.

In the world of seller financing, those basics I just referred to are our "standard operating procedure, or "SOP". Since the mortgage lending industry is "retooling" itself you can expect loan processing to take longer, be more intrusive, and be much more expensive. Even with good credit scores, income, and the ability to pay, you can expect longer loan processing delays.

Even so, the time has never been better to purchase a home than right now. That is especially true when you take advantage of the alternatives available with creative seller financing. One of the newest and most appreciated benefits is the ability to create your home buyer financing and get your cash at closing! In the old days you would arrange this kind of financing because you had to. It was also typically provided as a second mortgage to help close the deal.

Today this 21st century "cash creation" strategy eliminates your home buyer financing problems. Property sellers use this strategy because they want to, and because it works. Mortgage structuring includes first and second liens. That means there is no reason for home buyers to be sitting on the sidelines waiting for things to get better. The truth is, the buyers in the market will become so-called "market makers". The housing prices in many areas have been trending downward for more than a year. Current housing inventory will take at least nine or ten months to move in the best circumstances.

These are not the best circumstances. The rapid house value appreciation honeymoon is over. When you consider the influence of inflated appraisals, rapid price acceleration, low down and no down payments, adjustable rate and interest only loans, and no income verification, none of what is happening should come as a surprise. It was in fact inevitable.

So is this new reality. One of the most difficult concepts for home sellers today is the fact your home may not be worth nearly as much as you think or hope it is. The real estate market will ultimately determine what prices are acceptable. If you got cash out of your home with a HELOC, Home Equity Line Of Credit, you can very easily be upside down before this whole thing is settled. If you have an adjustable rate mortgage (ARM) that hasn't already reset, you may soon find yourself unable to make your mortgage payment. In addition you may find it extremely difficult to refinance your home or to sell it very quickly.

This reality puts the home buyers in the "driver's seat". The market will adjust more quickly with active buyer participation. The U.S. Government has made references to various types of borrower assistance to help reduce foreclosures. Unfortunately a relatively small percentage of home owners will qualify for the government assistance.

Rest assured it will be the efforts of the home buyers working with the right type of property sellers that will expedite the market correction, and establish the market prices that will get the backed up housing inventory on the move once again.

For home buyers to get maximum benefit from this opportunity, you need to be effectively pre-qualified for your new home purchase. Make sure you submit a purchase offer that will put you in a house that you can actually afford. Be sure to understand the costs associated with home ownership. Remember, being a home owner is a privilege, not a right. Get yourself prepared to be the right kind of home buyer in this buyer's market.

Your pre-qualification should include how much you actually take home each pay period, a complete list of all your debts, cash available for the down payment, and how much money is left after all debts are paid. If there is nothing left, you are trying to pay too much. With the proper instruction, the property buyer and the seller will create a very desirable win-win transaction. That's what you should expect when you create home buyer financing.

Copyright 2007| TDO Properties, LLC | All Rights Reserved

By: Keith S. Donald

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Keith Donald is a professional in private real estate financing. He consults individuals and small businesses in the "cash creation" strategy to properly structure, purchase, and sell real estate notes.

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