My Blog

Although credit has tightened in the sense that Buyers must demonstrate financial capability by having a secure source of income, good credit ratings, an appropriate debt ratio, and a substantial down payment, banks and mortgage companies ARE making loans.  Those who are independently employed must demonstrate consistent yearly income  over a period of several years to justify a loan, and they generally need to have a higher down payment. 

Lenders are always welcoming to potential buyers who wish to meet with them and have their credit worthiness evaluated for obtaining a home loan.  It is certainly worth the time to find out where you are financially.  This is the first step in the home purchase process, unless the Buyer intends to pay cash to purchase property.

There are other means to purchase a home that are sometimes open for Buyers who are non-traditional or who do not have sufficient down payment to obtain a bank or mortgage company loan.  It is essential to have a qualified and experienced Realtor represent the Buyer to proceed.

1)  A good source of lending is the Seller: some sellers, if asked through a Realtor, are willing to offer partial if not full financing to a Buyer who can demonstrate financial capability.  Sellers may not require as much down payment, although the interest rate for private financing is often somewhat higher than with a bank.  On the other hand, there is savings in regard to closing costs.  Along with a qualified Realtor, an attorney will be needed to draw up the deed of trust and the note for repayment.  The Realtors will help their respective clients in the transaction to negotiate terms acceptable to both parties.

2) One route for the buyer is to request to purchase with a Lease-Purchase agreement.  With this scenario, the Buyer offers and obtains a firm contract to buy, including the purchase price and a closing date into the future.  Next the Buyer leases the property, accepts the condition of the property as is at the time of occupancy, and moves in prior to closing. All terms, such as the amount of the rent and the down payment are determined up front and are negotiable. Some sellers who agree to a lease-purchase arrangement will also credit the Buyer with a portion of the accumulated monthly payment amount to increase the amount of the down payment when the property closes.  The Buyer is fully responsible to find and secure financing and close on the agreed date.

3)  Another excellent source of down payment or lending is family.  Many parents, grandparents, or siblings welcome the opportunity to either:  a) give funds in part or in full for home purchase to help their loved ones on the road to home ownership  b) lend funds at a favorable interest rate  c) co-sign a loan with a bank or mortgage company.  4) Jointly purchase a property.  These methods can be a win-win situation for all concerned when there are family members financially capable and emotionally ready to proceed in this manner.  When there is willingness but need to understand how to proceed, the services of an experienced Realtor are helpful to contribute explanations to the conversation, to be followed by an attorney to draw up the necessary documents.

4) Given the uncertainties and recent wild swings in the stock market, many Buyers are choosing to transfer their investment to the real estate market by paying cash for a property.  This is a solid way to proceed with funds not needed for liquidity in the near future.  Buying a property now when prices are at a low insures that the Buyer will realize considerable appreciation as the housing market normalizes and then grows.   Real estate is called real estate for a reason:  it does not evaporate with fluctations in the financial markets - the home or commercial building remains and although values may change, the owner always has the real investment -- a usable property for living, working, or rental income.

Once the home is purchased, the owner then benefits from deducting closing costs from tax liability during the year of purchase, and subsequently continuig to deduct the yearly total of mortgage interest paid in a given year.  Unless a huge down payment is made, most of the mortgage payments during the early years of a mortgage consists of interest, and this results in a substantial tax savings.

As a nationally recognized Realtor recently commented at the NAR convention in California, this is a wonderful time to buy:  EVERYTHING IS ON SALE!!  Please give me a call or email me to investigate beginning your search for real estate: 

Yates Nobles  434-996-0888  yates@yatesnobles.com