30
Oct
By First Rate Financial Group
Mortgage

What is Owner Financing When Buying A Home?

What is Owner Financing When Buying A HomeThere are many options when it comes to taking out a loan on a new home. One of the options that people might have heard about is called owner financing. In general, the property owner takes the place of a traditional lender.

Instead of someone taking out of a loan from a bank or a credit union, they take out a loan from the owner of the property. Similar to a traditional loan, the buyer will make payments to the seller over a period of time with a certain interest rate.

The Structure Of Owner Financing

If someone elects to go with owner financing, there are several terms that will specify the repayment structure. The most common structure is called a note and mortgage.

This is a secure form of financing. It is also the closest in structure to a traditional mortgage from a bank. The seller will put together a note that specifies the size of the loan and how it will be repaid. The mortgage will secure the seller with the property in case the borrower cannot repay the loan.

The buyer is still placed on the title of the home. Then, the mortgage is recorded with public records, just as in a traditional loan. There are other types of seller financing; however, this is the most common structure.

The Structure Of Repayment

You may have questions regarding this type of financing when compared to a traditional mortgage. Just as in a traditional mortgage, the repayment terms can vary. You will still have the opportunity to negotiate the terms of the loan.

Typically, interest rates are close to that of a loan from a bank or credit union. There are still options to set up a fixed-rate or adjustable-rate mortgage as well.

The Benefits Of Seller Financing

There are several benefits for both the buyer and the seller. First, seller financing may allow the seller to avoid paying capital gains taxes on the property. This can also help the seller offload a property that otherwise might not sell.

The buyer will also be able to purchase a home without having to borrow from a bank. Often, there is less paperwork and fewer fees. Finally, a buyer that might not qualify for a traditional bank loan might be able to buy a home through seller financing.

Understanding Owner Financing

It is important for everyone to think carefully before signing up for this type of financing. This is a unique option that you should understand when looking for a home.  Consult with your trusted home mortgage professional to get the best answer for your particular situation.

 

29
Oct
By First Rate Financial Group
Mortgage

Common Reasons Why Buyers Are Denied A Mortgage

Common Reasons Why Buyers Are Denied A MortgageWhen you are buying a new home, it is an exciting process. You have spent months searching and have found the home you want to purchase. You are ready to move into the home of your dreams. 

Unfortunately, you have found out that your request for a mortgage has been denied. This can be a deflating experience. Fortunately, there are ways to avoid this by understanding the most common reasons why a buyer is denied for a loan.

The Loan Requirements Have Changed

One of the most common reasons why you might be denied a mortgage is that the terms of the loan have changed. For example, the lender might have raised the minimum credit score requirement. This might sound unfortunate; however, it does happen from time to time.

Loan requirements might change from the pre-approval stage. If this happens, think about searching for a loan from a different lender.

You Added Debt

The debt to income ratio is going to matter when applying for a loan. If you are pre-approved for a loan and your amount of debt changes, the lender is going to look at this closely. Common forms of debt include student loans and credit cards.

Even small changes in your debt amount can impact your ability to qualify for a loan. Try to avoid buying a new car or maxing out a credit card during the mortgage application process. This will help you keep the loan you’ve worked so hard to earn.

You Changed Jobs

Finally, employment status also matters to the lender. When you take out a loan, the lender needs to know that this will be repaid. This depends on you having a steady stream of income from your job. 

If you decide to change jobs between the time of pre-approval and the time of purchase, your employment history and income stream do not mean as much. While changing employment will not totally disqualify you, make sure to discuss this possibility with your lender. Changing jobs within the same field is likely fine; however, moving to a new career entirely can be a red flag.

Mortgage Denials are Frustrating

It is frustrating to have your request for a loan denied. Fortunately, understanding these common reasons can help you avoid this deflating experience. Think about all of these possible scenarios when you apply for a home loan. And rely on the expertise of your trusted home mortgage professional.

20
Sep
By First Rate Financial Group
Mortgage

How To Crowdfund A Renovation Project

How To Crowdfund A Renovation ProjectCrowdfunding came into prominence with the Jumpstart Our Business Startups (JOBS) Act that President Obama signed into law during 2012 and subsequent enhancements. The JOBS Act made it easier for startups to raise money and for the first time allowed the legal ability to advertise the investments and accept small investors.

Innovate And Renovate

Crowdfunding is useful for many projects. The method raises money to create new products, make documentary films, and for many kinds of fashion items. Crowdfunding successfully raises money for real estate transactions. 

Smaller investors participate in real estate projects that they would otherwise not have enough investment money to create on their own. They may invest a few hundred or a few thousand dollars. When their smaller investment money combines with all the others, the project raises enough money.

One thing that makes crowdfunding projects work is their popularity. Affinity groups who have a special interest in certain things invest money in projects related to something that they like.

One application of this motivational factor is to raise money using crowdfunding to renovate buildings with a historical value or that otherwise attract the interest of the public. The process does not have to start with money. It can start with crowd sourcing ideas.

The CLUE® Mansion

A fun example is the Hasbro Company teamed up with Houzz to get innovative ideas from interior designers about how to renovate the CLUE® Mansion. The mansion is a backdrop for the popular board game.

This promotion celebrates the game’s 70th anniversary. The mansion’s style in the game stayed the same since the game debuted in 1949. The winning room designs, selected by fans, will be part of a new version of the game.

There is no reason to stop there. A real mansion can be renovated to match the game. This could be a CLUE® museum and could offer escape rooms as a money-making enterprise. This is just an idea at this moment. Perhaps, someone will take this up and run with it.

Crowdfunding Renovations

The point is, historic buildings that are of interest may need renovation funds that can be raised using crowdfunding. Those who have an interest in the building from the local community and elsewhere can support the project by investing in the renovation with a small comfortable amount.

Summary

Renovation projects are not easy to finance using traditional lenders. However, if a thousand people invest $100 each that is $100,000 for a renovation project in your community. Paying back the loan can come from a portion of the entrance fees.

Hopefully, this will spark continued interest in preserving and restoring historic homes, which are a terrific part of the American heritage.

If you are interested in learning more about current financing options, be sure to consult with your trusted home mortgage professional.