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| The easiest and best home mortgage bargains in Marco Island, FL
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Suppose you want to buy a house or condo. Suppose you don't want to get ripped off by a mortgage lender who might "bait and switch" by quoting ultra-attractive loan terms which are then inflated at the last minute when you arrive at the closing and you then have no choice but to sign the papers. Suppose you could obtain easy home financing with no loan application, no last minute surprises, no appraisal, and no lender hassles. Suppose you didn't have to worry about FICO scores, loan officer intimidation, and unnecessary paperwork.
Would you be interested? Of course you would.
What am I talking about? It's called "seller financing." Millions of savvy house and condo sellers provide their buyers with first and second mortgage seller "carryback" financing every year. But buyers usually must ask because few sellers volunteer to help finance home purchases. Given a choice, most sellers prefer cash. But when they see the benefits, especially a higher yield than is available from bank savings accounts, they realize the seller-finance benefits.
Only the smartest home sellers want to carry back a first or second mortgage for their buyers. But there are many motivations. Having carried back many mortgages for the buyers of my rental properties, I know the motivation list includes (a) selling the home quickly for top dollar due to easy financing, and (b) earning excellent interest income. For these reasons, home builders often finance their home sales, either holding the mortgages or later selling the mortgages to investors.
As a buyer of homes with seller financing, I've found the best candidates for seller financing are often residences being sold by elderly retirees who need additional retirement income. Surprisingly, these sellers usually don't understand the benefits of seller financing until I make a purchase offer and they learn the advantages. When the seller sees the purchase offer on the kitchen table (where all great decisions are made), that's when the home seller realizes the benefits of financing the home sale.
To illustrate, in today's market a purchase offer with a 6 percent interest rate mortgage carryback looks great to a home seller whose alternative is a bank yield of only 2 to 4 percent. For example, I recall buying a house from a "little old lady" in her eighties who was selling to move closer to her daughter. When I asked the nice Realtor holding a Sunday afternoon open house if the seller would carry the mortgage, she said "Absolutely not." Pretending to be deaf, I made my purchase offer anyway, which provided a 10 percent cash down payment with a 90 percent seller carryback mortgage. To my surprise, and the Realtor's too, the seller accepted my offer. I'm sure the "convincer" was the fact the seller would receive a $1,023 payment every month, thus giving her financial independence. About five years later when I decided to sell that house, the old lady begged me not to pay off her mortgage. I then convinced my buyers to take over the monthly payments so the seller could keep receiving her $1,023 payment every month.
Because cheap home mortgage money is abundantly available today, few home sellers tell their listing agents, "I want to carry back a first or second mortgage to help sell my home fast for top dollar and create an excellent secure investment for myself.'
But seller financing works for home buyers and their savvy agents who know how to create this easy financing. Here are four methods that have worked for me:
1. Ask the listing agent, "Why is the seller selling this nice home?" The goal is to learn the seller's true motivation. In the situation above, when I learned the seller was moving to be closer to her daughter, and I discovered the house had no existing mortgage (over 50 percent of U.S. homes have no mortgages), I knew that house was a great seller finance candidate. Don't let real estate agents discourage you from making a seller finance offer. Of course, if you learn the home seller needs lots of cash, such as in a divorce, that house or condo might not be appropriate for seller financing.
2. Look for free and clear homes listed for sale. If a home listed for sale has a low balance mortgage, or no mortgage, that might be a seller financing indicator. Your buyer's agent can usually search the local MLS (multiple listing service) to find listings with no existing mortgages.
3 Vacant unsold homes usually indicate a motivated seller. Another signal of a possible seller financing candidate is a vacant house which has been on the market for sale at least 30 to 60 days. Vacant fixer-upper houses also offer great seller financing possibilities because most institutional mortgage lenders won't finance such homes except at high interest rates.
4. Vacant homes for sale by retirees or wealthy sellers. For some unexplained reason, retirees and wealthy sellers are often very anxious to sell their vacant houses. These sellers tend to respond especially well to seller finance offers which specify the exact monthly payment and interest rate the seller will receive. Ask for a long-term mortgage, such as 20, 25 or even 30 years. If the seller wants a shorter term, suggest a 30-year amortized mortgage, with a balloon payment due at the seller's option in 10 years.
As an investor who has convinced many home sellers to accept my seller financing offers, I find their greatest fear is I won't make the monthly payments and they will have to foreclose. Then I explain that is the best thing that could happen to the seller. If I default, then the seller will either receive the full balance due at the foreclosure sale from a bidder or reacquire the house to resell for a second profit.
When that isn't enough to convince, additional methods I've used include:
1. I offer to prepay six to 12 months of mortgage payments at the closing, or
2. I give the seller a year's post-dated payment checks so all the seller must do is remember to deposit a check on the first day of each month in their bank account, or
3. I accompany my buyer's agent to present the seller-finance offer so I can meet the seller. Most agents want to avoid having the seller and buyer meet, but I find this method works extremely well for discussing seller financing.
For home buyers, the best finance method is to make a modest down payment, such as 10 to 20 percent, and ask the seller to carry back a mortgage for the balance of the sales price. Not every home can be bought this way, but all you need is one.
Buyer advantages include obtaining a home loan without mortgage hassles. Seller advantages include a quick easy sale for top dollar with excellent secure monthly income. Vacant, free-and-clear houses or condos that have been listed for sale at least 30 to 60 days and offered by anxious elderly or wealthy home sellers are often the best candidates. Fixer-upper houses, which conventional lenders won't finance, are also excellent seller financing candidates.
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