Personal Finance King
The New Rule For Buying a Home - Using Owner Financing
But our current economic system is making it challenging for the average person to achieve the American Dream of Home Ownership. In times of unstable job markets, with double number unemployment forcing people to become self-employed to make a living, the banks are requiring a W-2 stable job historical past in order to issue loans. In times of a great credit crisis, the banks are requiring stricter credit scores as compared to most people are able to achieve. Fewer and fewer honest, hard working Americans who are used to following the 'traditional rules' with regard to owning a home are having the opportunity to own their own homes.
What if you could achieve the American Dream of Home Ownership without worrying about the assistance of a bank?
The purpose of this document is to allow motivated home seekers an opportunity to write a New Rule with Home Ownership that allows you to declare your freedom from the services of a Bank in order to partake in your piece of your American Dream of Home Ownership!
In order to understand the New Rule of Home Ownership, let's take a closer look at the active rules of purchasing a house with Traditional Bank Financing.
The first part of the Traditional Bank Financing focuses on Qualifying for a Financial loan. While many different loan packages exist, the most common loan written in today's market is an FHA Loan, and therefore, we shall employ their guidelines as an example. The following are guidelines for an FHA Loan:
o FHA Loans require a minimum credit score of 620 to be eligible for a loan
o FHA will require 3. 5% down on the home. This down payment MUST come from a person's account. You are not allowed to borrow from friends, family or anyone else. You must document where the funds for the down payment originated in. Specifically, the source of the down payment must be from your personal checking, savings or retirement account and CAN NOT be took out!
In order to work with most Realtors, you must first get pre-approved for a bank. Many Realtors won't even show you a residence unless you can prove that you are able to afford and receive financing for the property. This painful process of pre-approval from a traditional bank can take 2-3 days and involve the following steps:
o Proof of Creditworthiness
o You must provide 2-4 years truly worth of tax returns!
o You must provide your last 4 pay check stubs if you are an employee or an current Profit and Loss statement if you are self-employed, a business owner, an independent contractor or entrepreneur. However , if you cannot show a regular pay stub as proof of income, then you may want to skip ahead to the part of this document where 'Owner Financing' is discussed, as you will find it increasingly difficult to qualify for a mortgage.
o Your bank may require you pay the balance of other debit to help improve your credit score to qualify for the loan
o And the worst part... this proof creditworthiness is done throughout the entire home buying process! Even once you qualify and pick out the home of your dreams; underwriters in the bank will have you go through the same process to make sure you still qualify.
Now that you are pre-qualified for the home to your dreams, you may finally begin the process of working with a Realtor to find your new home.
Once you've found your home, the Traditional Bankers will want an inspection performed on the home and may require the seller to fix EVERYTHING for the bank to finance an individual's loan. Some people just want a small discount on the house and they will do their own repairs however , many times a traditional lender will not allow you to do this! These small fixes may add to the total price of the house.
Also, expect to pay Realtor charges, bank fees, filling fees, "point buy down" fees, loan origination fees, closing costs, title fees, surveys online, appraisal fees, and anything else imaginable for which to be charged. Though many of these fees can be rolled into your financial loan, over the long term, you may be paying an extra 10% in unnecessary Financing Fees that are loaded into your loan!
Can you imagine if there was a quicker, easier, and less intrusive way to take your share of the American Dream? What if you may look at homes without having to pay a Realtor fee, pre-qualify for a loan, and go through a 3 month home buying approach? After all, we ARE in a BUYER'S market in Real Estate, so why shouldn't we be able to buy?
Consider the possibility of declaring an alternative Rule. Instead of working with (and paying for) a Realtor, why not work with the Seller directly? Especially if that seller is a Skilled Real Estate Investor who is not only willing to sell the house in a quick and simple matter, but is also will to FINANCE a sale of the house on a short-term basis!
Earlier in this eBook, we went over the process of the Tradition Bank Loans. Now, we shall detail the 7 Easy Steps of Purchasing Your Home with Owner Financing:
* Contact the Seller on the town without having to pre-qualify for a loan and look at the home to decide if you want to purchase.
* Settle on a price
* Agree to some down-payment and interest rate
* Once you've agreed to a price, down payment, and interest rate, complete a Deposit to Hold form in addition to pay this 1% fee applicable to the sales price of the property. This fee will take the property off the sector while you are closing on the home.
* Fill out credit application; provide 2 most recent paycheck stubs and bank arguments as proof that you can afford the monthly payment.
* (Optional) If you chose, you can order your own home inspection to review the condition of your home
* Close in 2-5 business days
Buying a home from a Professional Real Estate Investor is quick and easy. Once you have wrapped up on the price and monthly payments, you have minimal paperwork to complete and can close on the transaction within one week! The following can be a summary of some of the benefits of Owner Financing compared with Traditional Bank Financing:
* In many cases, there is no minimum credit score needed
* Instead of 10% Traditional Bank Finance Fees / Closing Costs, your Owner Finance Fee averages so that you can 5% of the transaction.
* Unlike Traditional Bank Financing, your down payment for Owner Financing may come from virtually anywhere (as long as it is a legal way to raise the funds). You can borrow the money from family, friends, some others. There are also some tax incentives for you to use part of your retirement savings. Either way, with Owner Financing, you are allowed to increase your own down payment as you see fit!
* You and the Owner Finance Seller will agree on a time to "close" on the home and may close within 5 business days!
* Your Owner Finance loan is dependent on your downpayment and ability to pay the monthly payment and NOT on your credit or having a W-2 Job. Therefore , Business Owners, Entrepreneurs, Unbiased Contractors, and the Self-Employed may qualify for Owner Financed Homes!
* You are not required to provide extensive documentation to obtain any loan
Due to the efficiency, simplicity, and cost effectiveness, you can see why buying directly from an investor with User Financing is the New Rule for Buying Homes. Owner Financing interest rates may be a little higher than market price when you initially get your home, however , this higher rate, along with a sizeable down payment, will actually help you obtain conventional financing at a reduced rate down the road when you decide to refinance!
A good way to look at Owner Financing is that is a solution to buying a home with short-term financing. Once you have paid your Owner Financed note on time for say 12-24 months, it's easier to refinance your current existing note with a traditional bank loan at a lower interest. It's much quicker, easier, and less intrusive to refinance a home into traditional financing then it is to purchase a home with traditional financing!
The following example will detail the approach and the costs of owner financing:
o John chooses to purchase a beautiful home for $150, 000 with a classic bank loan. John's credit score is 590 and the bank will not loan him any money until his credit score is at at a minimum 620. John understands the importance of owning a home and wants to buy something now.
o John finds your home that is being offered for $150, 000 with Owner Financing. John has $15, 000 to put down and wishes to close in 5 business days. John's new loan is at an 8. 5% rate for 30 a long time and the sellers would like John to refinance his loan in 24-36 months. John's monthly payment is $1, 350 and it includes Principle, Interest, Insurance, and HOA fees. John is happy because he can afford $1, 350 per month and is able to take his part of the American Dream!
o As John pays on time for, say, two years, John has an excellent payment history with his current lender. John will also need to be working on his credit in people 24 months to raise his score to the current minimum of 620.
o When John approaches a traditional bank John will be able to illustrate the following:
o John's $15, 000 down payment shows that he has 'skin in the game' and is not just going to bail with his house payments
o John CAN afford and has been paying $1, 350 a month at a 8. 5% charge for his loan
o John's credit score is now above the minimum required 620
o If John are able to $1, 350 a month at 8. 5% interest, John can easily afford a $1, 100 a month payment with 6. 5%!
It is much easier to refinance a loan rather than trying to get a loan for the original financing! Since you are already in their home, there is no inspection required, no lengthily closing procedures and there is no longer all that extra red tape that is with buying a home with traditional financing!
As you can see, purchasing with Owner Financing can be easily done and easily closed for those who cannot use a traditional bank loan but deserve to own a home now.
In today's market, due to tough commercial times, there are many people selling their properties. Yet, despite the fact that this is a 'buyer's market', it is tougher to buy a home using Traditional Bank Financing than ever before. Following the old, unwritten rules will lead you to a long and unhappy life in an house complex. Motivated home seekers looking for their piece of the American Dream are unable to achieve this great promise by conventional and conventional means due to stringent lending requirements initiated by the very same financial institutions that gladly took over 1 billion of our tax dollars to bail them out! Banks tightening up on their lending practices is causing your shortage of homebuyers in the market. This is one of the biggest reasons that real estate values continue to free fall because there are isn't people who can qualify for available homes while following the unwritten rules.
Inspired home seekers, looking to break away from all the old rules and ready to write his or her own New Rules to Home Ownership will be able to take advantage of this bidder's market, and with Owner Financing, you will see more and more people purchasing homes. If you are in the market to buy a home however , you cannot qualify for a regular loan, I strongly recommend you contact a company that specializes in Owner Finance Homes.
How to Choose a Car Finance Broker - Some Useful Tips
In general, they act as the key source and offer services such as finding a implemented or brand new car model that the customer wants and within a budget range. At times, these car brokers even help car buyers in negotiating with a used car seller. However , these days there are many car finance services and making a proper options is turning out to be a very complicated process. You need to understand that not all car finance services are fair. Therefore , if you are looking to pay for a car or choose a car financing service then here are a few important points that you should keep in mind while making a selection:
You must confirm whether your car finance consultant or broker is a member of FBAA or COSL or both of these sector associations. While Finance Brokers' Association of Australia Ltd. (FBAA) is one of Australia's leading membership bodies with regard to finance broking professionals, the Credit Ombudsman Service Limited (COSL) is an independent organisation that is mainly indulged with handling complaints about finance brokers. You can easily confirm finance consultant's membership by searching through their member checklist. Adding to this, WA Finance Broker License is yet another additional requirement for finance brokers serving in Western Queensland. Nevertheless, if you are looking for finance broker and residing in the state of WA or other states of Australia, it is critical that the broker must hold a WA Finance Broker License. A broker holding WA Finance Broker License comprises passing a comprehensive range of checks, educational requirements and operational requirements.
While selecting a car finance broker also make certain you know about their range of lender accreditations. The range of accreditations held by a broker governs the range of options they are able to offer. You must note that a broker's accreditation can not just change the range of finance options available to you, but it may possibly affect the quality of those options.
You must choose car finance service that recruits and retains professional in addition to knowledgeable staff. The broker must be an experienced professional who can demonstrate and explain about why a particular product is usually highly recommended or even suites your specific circumstance. If possible make sure you even ask for testimonials from previous clients that in turn could help you in the confirmation of their experience.
As mentioned earlier, today there are many finance services available in the market. Therefore , you have got to find out more about any extra service that a broker can provide. You should expect your finance consultant to supply detailed information about timeframes, and any fees or extra charges related with your finance. The key point is if a broker is being capable to clarify the comparison rate of your recommended vehicle finance and the overall cost of your finance package then it can be quality sign of a good finance broker.
These are some important points that can help you in choosing your car money services easily. Today a lot of responsibility goes along with buying a car and taking financial help through car brokerage service. Just taking care of few essential steps can help you select your car broker and further purchase a nice new or used car.
Six Ways to Keep Your Credit Score on the High End
Credit is important; adults know that, but still don’t do what they need to do to keep their score healthy. These six tips will show you what it takes to keep your credit score high so that you can have more flexibility in your financial life.
1. Pay Your Bills on Time
This might seem obvious, but it is a major factor in your credit score. This goes for all of your bills, not just credit cards. Paying your bills on time gives creditors no reason to complain and that is what will keep your credit score clean over time.
2. Debt to Income Ratio
It isn’t necessarily how much available credit you have it is how much of it is getting spent. Your combined credit card balances should be 30% or less of your combined limits. Keep that number at or lower than 30 and you’re in great shape going forward.
3. Watch Your Loans and Lines of Credit
Again, credit card balances are not the only influencers here. If you have any loans or lines of credit out, it can hurt your credit score by creating more debt than you should have. Keep an eye on your overall debt and you should be able to maintain a better credit score.
4. Don’t Close Old Credit Cards
Credit age is another factor worth considering. The longer you have an account in good standing, the better it is for your credit score. Just because you don’t use an old card doesn’t mean that you should get rid of it, either.
5. Know What Goes Into a Good Credit Score
There are some things that might not affect your score that you didn’t realize. Think about these five important factors: payment history, mix of credit, credit age, level of debt, and recent credit. Hit these five criteria and you should be in good shape when it comes to your credit score.
6. Limit Your Credit Inquiries
Another thing that can damage your score is too many credit inquiries. This can be for loans (auto, home, or personal) or for credit card applications. Only apply when necessary, especially because a new credit account will lower the average credit age on your account.
Being smart about the way you handle your credit can set you up with some serious flexibility when you need it thanks to a strong credit score.