Many homeowners with property for sale are struggling to locate qualified buyers. Tightened lending criteria has made it difficult for many people who want to buy houses to qualify for home mortgage loans. Competition with low-cost bank owned homes has made it challenging to find buyers willing to pay current market value.
To obtain the asking price for property for sale, many sellers are offering creative financing strategies to attract buyers who cannot qualify for bank loans. These include owner will carry, lease purchase option agreements, and subject 2.
Entering into unconventional financing allows homeowners to generate cash flow from their property and gives borrowers the chance to improve credit scores while working toward purchasing a home.
Owner will carry involves the seller acting as the lender. Buyers provide a down payment to secure the property and submit monthly payments which are contributed toward the purchase price. A few options exist when entering into this type of agreement.
The first involves having the owner finance the full amount for 2 to 3 years. A real estate contract is executed by a lawyer which outlines the purchase price, interest rate, payment amount and due date, late payment fees, down payment amount, and a default clause.
Buyers must engage in credit repair strategies during the owner-finance contract period in order to qualify for a home mortgage loan when contract terms expire. Since there is no guarantee that buyers will be able to obtain bank financing, the contract should include legalese to address what measures will be taken if buyers cannot qualify for a home loan.
The second type of owner financing involves seller carry back mortgages. This can encompass sellers’ carrying full or partial financing. In most cases, sellers only carry back a portion of the purchase price and buyers obtain a bank loan for the balance. When sellers carry back part of the purchase price, buyers require less funding which makes it easier to qualify for bank financing.
When partial financing is offered, seller carry back mortgages usually extend for 2 to 5 years. Buyers hold two mortgages against the property. The bank is the first lien holder and the seller carries the second mortgage. A real estate contract must be executed to record loan terms and should include a default clause.
Lease purchase option agreements are often referred to as lease to own or lease options. Regardless of the name, lease purchase agreements involve renting a home while contributing funds toward the eventual purchase.
Sellers typically require a down payment to secure the property for sale. A portion of rent money is contributed toward the purchase price. Sellers rarely contribute the full amount. The average contribution hovers around 25- to 40-percent.
For example, if rent payments are $1,000 per month and sellers contribute 40-percent of rent monies toward the purchase, buyers would accrue $4,800 in home loan payments per year. If the contract extends for 3 years, buyers will have paid $14,400 toward the purchase price, along with down payment funds.
Sellers can allow buyers to lock-in the purchase price or require buyers to pay current market value when the contract ends. Buyers should submit rent payments via personal check and retain a copy of cashed checks to provide evidence of payment when applying for a home loan.
Subject 2 can be a good option for buyers with bad credit who can afford to buy a home, but do not qualify for financing. Buyers take over mortgage payments using the seller’s good credit and loan documents remain in the seller’s name until the buyer can obtain bank financing. However, property rights are transferred to the buyer, allowing them to take tax deductions.
Sub2 contracts can pose a risk for sellers, so careful consideration should be given before entering into this type of agreement. Buyers must engage in credit repair strategies to refinance mortgages as quickly as possible.
To me financial healing works on two levels. Firstly and most importantly there’s the level of changing your beliefs.
Work On Your Negative Money Beliefs
Beliefs about money and finances have a huge impact on your ability to save money rather than spend it.
I liken negative money beliefs to what I call ‘mind viruses’. If you have a mind virus, it’s like your PC – no new programs you add, no matter how good they are will increase the performance of your PC,
So if people are not in the financial position they want to be, there are some mind viruses present, and we need to remove those viruses – in our case our negative money beliefs.
So when we undertake financial healing, we’re getting rid of the viruses. And this involves looking at people’s attitudes and beliefs about money and about themselves and changing these beliefs. So we’re getting rid of the negatives and re-imprinting our mind with positives.
Practical Money Saving Strategies
Secondly there’s also the practical side as to what to do with the money – how you can save money rather than spend it all.
Sometimes the savings are subtle. For example my background is in financial services and therefore I know that when people have taken out policies to pay out life assurance a while ago, they may well be able to get that policy cheaper now.
Life Assurance Premiums May Be Cheaper Now
This is because of two factors. Firstly the market is more competitive these days, and secondly there have been great advances in medicine. So if you have a certain medical condition it may not now be rated as highly and hence the policy premiums will be lower.
For example, things like AIDS didn’t quite have the impact that we possibly thought it may have in the late 1980s. And as a result premiums have dropped, so there are various ways of saving money now.
To outline another life assurance example – cover you purchased that was relevant at the time – maybe to protect a mortgage or when you had a young family – may not be relevant now because the children have grown up and moved on.
So your level of life assurance may now not be necessary, and you may be able to substantially reduce your outgoings.
So there may be ways of getting reduced levels of cover that meet your current requirements but will save you money on a monthly basis. It’s always best to explore this in association with a financial advisor that you know and trust.
Financial Healing Summary
Firstly you need to remove any limiting beliefs about money and finance that are preventing you from saving money for your future. This will prevent new, useful personal finance strategies being sabotaged.
Secondly, you need good advice on your current spending to check that it meets your lifestyle needs currently. In our two examples we spoke about life assurance premuims, but you also need to audit all your regular spending areas.
It’s Not Just About Money
Once you’ve dealt with a few negative money beliefs, you may realise something. Often it’s beliefs about ourselves that we need to change. It may be you believe you are not good enough to have good relationships, be healthy and be wealthy.
So there is a bigger picture here; we don’t look at just beliefs about money but we look at beliefs about ourselves.
Mark Bristow, The Financial Healer, works with people’s Self-Worth to enhance their Net Worth.
You can turn the gloomy times into profitable opportunities for yourself with the right leadership finance strategy, even during these times of the world economic setback. This involves nothing but being able to clearly understand the market and recognize the right opportunities to think about your investments.
Whether you are acting on behalf of a business, or you are an individual, the right leadership finance strategy can take you quite far, and show you success that most of us may have not hoped to see. Let us look at the most important points that play an important role in deciding how to emerge profitable during a financial crisis.
Recognizing the Opportunities
One of the things most of us fail to understand is that since the market is at its lowest, it is very clear that there will be a huge number of sectors that will only see the returns improve over time (as financial conditions pertaining to their business improves). If you can recognize such sectors, you can come across some very profitable opportunities and positive investment options.
Buying stocks or investment in businesses at the present may require much less from you, as the values are pretty low, but the returns that can be expected over time may be quite profitable. It all comes down to research and studying the market to come across the right investment plans.
Foreign investments can be another great factor towards successful leadership financial strategy. There are a number of countries that pose to offer very good opportunities for foreign investors, and can show very quick growth for your money. However, you should be aware of the associated risks, and also consider the right way to handle laws that govern such businesses and investments.
Long Term and Short Term
On top of the above options, you can also look into the various investment opportunities that offer to be pretty straightforward and risk free. Find out more about such long term investment schemes that will let you add money to it every month out of your savings. The idea is to have money set aside for your expenses, some money for liquid savings, and the rest towards the long term investment plan.
On the other hand, if you want a quick increase in your wealth, forex investments and stocks can also be a good option for you, provided you are experienced with such schemes and are aware of the risks involved. You can also opt for dealing with a good finance agency to advice you on such leadership finance strategy and show you the right way to approach your goals with the least number of associated risks!
Importing and exporting are only some of the duties business owners make to gain better reputation and finances. However, some business owners wish to improve their safety by opting for financial solutions such as import finance strategies. This option offers numerous features, but there are still ways to improve such service. Below are some of the following.
Know import rules and regulations
In order to improve import finance strategies, business owners need to mindful about import rules and regulations of countries. Of course, there are cases when businesses have overseas clients. Therefore, you need to have sufficient knowledge about import rules and regulations. This is important to avoid delays. In addition, having sufficient knowledge about shipping regulations will help make ventures better and more efficient for both buyer and seller.
Opt for the right payment method
The next way business owners need to do in order to improve their import finance strategies is by opting for the right payment method. As of now, business owners can opt for numerous payment options for their import finance solutions such as bills of exchange arrangement, letter of credit and open account. These options can provide the best features that can help make transactions safer and more effective. However, you need to be aware about charges and hidden fees from such options.
Be cautious in choosing the financial institution to work with
Another option that business owners can do to improve their import finance strategies is to be cautious in choosing financial institutions to work with. Of course, there are numerous financial institutions that offer such services. However, not all institutions can provide you the right service that can match your needs. So, it is best for business owners to spend time determining their service to help them assess if they can gain wonderful benefits.
Finally, it is also best for business owners to find alternatives. Surely, import finance solutions from reliable financial institutions are very effective. Not to mention, this service can secure both buyers and sellers. But, there are still cases when issues can affect such strategy. Therefore, finding alternatives can be a good plan. For instance, you can choose to pay for your orders in advance, but make sure to pay for low value shipments only. Or perhaps, when paying a foreign supplier, you can send payments electronically. And, you can also open an account with suppliers if you are working with them for a long time.
Knowing all these tips can help owners improve their ventures which can help them become better and more profitable.