Posts Tagged ‘financial institution’

If you’ve ever taken out a mortgage with a bank then maybe you’ve experienced this: about 6-8 weeks after closing you receive a letter from a totally different lender who now has control of your loan and you are to send the monthly payments to them.

Well the original bank sold your mortgage or real estate note for cash to another financial institution that wanted a long-term cash flow investment. If you have “owner financed” the sale of your house with the buyer you can do the same thing. Sell your deed of trust or real estate note for cash to an investor who is looking for a long-term cash flow. There are lots of different names for a note: Deed of Trust, Contract For Deed, Mortgage, Loan, IOU, Promissory Note and others. For simplicity sake I’m going to use the term note.

Let’s say you have $80 in one hand and $100 in the other and I said you could keep only one. Well you’d keep the $100 of course but what if I told you you could have that $100 but it will be paid out at $1 a month over the next 8 years but you can have the $80 right now. Well that changes everything.

If you looking to purchase something really special for your family or to pay off some high-interest, nagging debts; maybe you have another promising investment opportunity, or you simply prefer not having the responsibilities and risks of carrying a Note. I can help you sell that note for cash to a buyer looking for a long-term cash flow investment.

Due to the current economic crisis, the price an investor is willing to pay for your owner financed loan has never been higher! If you are interested in finding out how much an investor is willing to pay for your real estate note call or email me today for a free quote.

Here are some faq:

1. WHO BUYS NOTES?

There are various people and companies who like to invest in real estate notes instead of the stock market, commodities or apartment buildings. They could be a one-person operation, or an office of 4 or 5 people, or 20 people, or a big investment house of 100 people. I don’t put your note on a web site forum and hope somebody sees it or market to people right out of a “How To Get Rich Investing In Real Estate Notes Seminar”. I work with only reputable, long-term investors.

2. WHAT KIND OF NOTES ARE YOU LOOKING FOR?

I can help you find an investor for various kinds of  Real Estate Notes:

    o  Single or in portfolios.

    o  Single Family Residential

    o  Duplex, Triplex, Fourplex

    o  Apartments

    o  Income Property

    o  Improved Land Contracts

    o  Recreational & Resorts

    o  Commercial Land Contracts

    o  Farm & Ranches

    o  Condos

    o  Vacant Land

    o  Bulk REO (Real Estate Owned) and real estate property portfolios

    o  Bulk mortgage note portfolios

3. WHAT IF THE HOME BUYER IS BEHIND IN PAYMENTS?

If you have a delinquent mortgage note I can help you. There are investors who will purchase notes that are behind in payments. If you are frustrated and not getting your monthly payments and just want to be done with the whole thing, I can help you find an investor who will purchase that delinquent note. This includes semi-performing (buyers are over 30 days late with payment) and non-performing (buyers are over 3 months behind in payments) mortgage notes. Get rid of that headache note and let someone else deal with it.

4. HOW MUCH IS THIS GOING TO COST ME?

There is no charge to you, the note holder ever. Getting a quote from an investor is free with no obligation to sell your note and the entire process is completely confidential. The borrower until the transaction is complete. The investor pays all broker fees.

5. HOW MUCH WILL I GET FOR MY NOTE?

This unfortunately I can’t answer, as there are too many variables involved. Each transaction is unique so an investor looks at several key factors for pricing. These include the type of property and location, down payment, equity, the buyer’s credit, how long the buyer has been paying you, and the terms of your note like interest and monthly payment amount. All that goes into their risk assessment and they make their offer based on that. Having said that though an average note will demand anywhere from 80 to 93 cents on the dollar depending on those factors.

6. HOW LONG WILL IT TAKE BEFORE I GET MY MONEY?

All deals vary, but normal closing time is 2 to 4 weeks once the investor starts their due-diligence process (inspection, appraisal, credit check, etc).

7. I JUST NEED SOME CASH NOW BUT I LIKE HAVING THE MONTHLY CASH FLOW.

There are a couple of ways to get creative:

Partial Purchase

A great option for note sellers because of it’s extreme flexibility and because in many cases it is possible to receive MORE MONEY than the original selling price. If you need cash right now but want to keep your note for the cash flow investment you can structure a deal so that you sell just a portion of your monthly payments for a certain amount of cash.

Let’s say that you sold your house for $250,000, the buyer gave you $25,000 as a down payment, and you now have a $225,000 note at 7% interest for the next 15 years. You want the monthly income but are in need of $50,000 cash right away. An investor could give you that $50,000 in exchange for buying “x” number of monthly payments, after which the note reverts back to you for the remainder of the term.

Split Partial Balloon

If your note has a certain amount of payments then a balloon payment at a certain date you can sell the payments leading up to the balloon and a portion of the balloon when it comes due. You get a lump sum of cash at closing and then receive a portion of the balloon payment when it gets paid off.

8. I HEARD I SHOULD HOLD ONTO MY NOTE FOR A NUMBER OF YEARS TO GET A BETTER PRICE.

This is called “seasoning” the note. The reason for waiting is that you are hoping to increase the equity in the house, which will help the note command a higher price. While this could happen other variables might decrease the price of the note the longer you wait.

It’s possible that maybe the property might devalue in price. What if the homeowners rack up a lot of credit card debt buying appliances, furniture, landscaping or remodeling and their credit score goes down? What if the homeowner loses their job and they stop making payments?

An investor looks at many things when assessing risk on a note and how old the note is is just one of them. A 3-year-old note with a bad credit score might be priced less than a 3-month-old note with a great credit score all other things being equal. Every note is different. Brand new notes and 20-year-old notes are sold everyday.

9. CAN I GET CASH AS SOON AS I CREATE THE NOTE?

Yes this is called a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note. If you’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the initial process and you don’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.

10. HOW MUCH DOES THE NOTE HAVE TO BE FOR?

The minimum is around $100,000 if it’s under that then it’s really not worth it for the investor. So a note could be for $100,000, $250,000, $500,000, $800,000,  $5 million and everything in between. There are all different kinds of investors looking for all different kinds of note amounts.

11. CAN I SELL MY 2ND LIEN NOTE?  

If you have a 2nd lien, where there is a bank or another investor with a more senior lien

against the property, you may be able to sell the note, but the price that you receive won’t be nearly as high. You generally won’t be able to sell those types of notes at any sort of decent price unless the buyer has put in at least 30% of his own money as a down payment or in built-up equity and has fantastic credit. Unfortunately investors just aren’t interested in 2nd lien notes or mortgages right now.

12. IF I OWNER FINANCE WON’T I ACTIVATE THE DUE-ON-SALE CLAUSE IN MY MORTGAGE. AND IF I’M ONLY GETTING A SMALL DOWN PAYMENT HOW WILL I PAY THE BANK LOAN BACK?

The Due-on-Sale Clause is a provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.

The link below is to a great article by real estate lawyer William Bronchick and will dispel any misunderstandings you may have about the due-on-sale and suggest a simple, yet effective strategy to get around it.

There is No Due on Sale Jail

If you’re thinking about owner financing your home you can also do a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note. If you’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the process and you don’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.

13. WILL THE HOME OWNERS HAVE TO REFINANCE?

When an investor purchases your note, all terms remain the same.  The only thing that changes is where they send the payment. If fact the borrowers are not contacted until the transaction is complete.  

14. HOW DOES THE NOTE SELLING PROCESS WORK?

You’re interested in finding out about to selling your note.  Give me a call or email and I’ll get some information about the property and note from you. We can do it over the phone or I can email or fax you the form. It’s an easy 2-page worksheet you can fill out in about 10 minutes. It asks for the loan balance, interest rate, length of loan, and basic information about the property. Then with the information you gave me I look for an investor who is interested in buying your note.

If I find an investor who is interested they take 2 or 3 days to crunch the numbers, assess their risk and see if it’s a good investment for them. If they are interested they make what is called a soft quote, which is their best offer before having reviewed any supporting documentation, such as the payee’s credit report and property appraisal. The quote will state something to the effect: “subject to review of credit – assumes good credit” but pricing should not change that much unless the property value comes in low or the homeowner has a low credit score or subsequent documentation does not support the information provided on the worksheet.

If you accept their offer you’ll draw up an option of purchase and sales agreement with the investor. The investor then starts their due-diligence on the property and the homeowners. Just like selling a house — home inspection, appraisal, credit checks, copies of legal documents, payment history and verification of current balance. This enables the note investor to verify the information provided, analyze the risk, and confirm their pricing of the note.

Once all the T’s are crossed and I’s dotted and contracts signed the investor takes control of the note and the title company sends you a check.

Craig Meriwether is owner of Kula Investments, a company founded you help you get top dollar for you owner financed real estate loan. [http://www.ioubuyer.com]

For a more in depth discussion of owner financed loans please download my free ebook How To Owner Finance Your Home [http://www.ioubuyer.com]

Author: Craig Meriwether
Article Source: EzineArticles.com
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Lease Purchasing is a fascinating concept that allows a prospective tenant the realistic possibility of becoming a home owner, sooner rather than later. I currently work in an office in which the demographic tends to be people in their late 20′s or early 30′s that have recently graduated from College or University. The majority of people I work with rent homes or apartments within the Greater Toronto Area. Over the past couple of months I have started a number of casual conversations with people asking why they choose to rent instead of rent to own or lease purchase a home. I figure why pay a landlord monthly rent that ends up paying his mortgage instead of building equity in a home of your own?

There are a number of obvious reasons why it is not easy, nor practical, for some people to buy a home outright in today’s economic environment. Through my many conversations with my work associates, I constantly hear all the usual reasons that keep people from home ownership. They include: having bad credit, not having enough money for a down payment, they cannot afford the upkeep of owning a home, and many other seemingly legitimate reasons. Having said all that, I never heard anyone say that they had no interest in owning a home. In fact, everyone I talk to say their goal is to either save enough money for a down payment and eventually buy a home or wait a few years and fix their credit so a financial institution will grant them a mortgage. These are all plausible strategies to home ownership. However, what they have in common is that they postpone home ownership for the future and they do not allow for equity building in their dream home right now.

The main problem is that a majority of people think that the only way to own a home is through the traditional method of saving up for a down payment and applying for a mortgage. In the meantime, they are spending thousands of dollars per year in rent and helping someone else pay down their mortgage instead of doing that for themselves. We live in an era where the constant mantra is: “one must think outside of the box”. This quote could not be any truer especially in today’s economic environment where banks are no longer freely lending money to people. Credit scores today must be in the 650 range to be in the ballpark for mortgage financing. As a result, cancelling credit cards is not a real option because it can negatively affect your credit score yet having too many credit cards or a credit line also drops that score because you have too much exposure to debt. In short, the banks are finding reasons not to lend people money. Therefore, less people are being approved for mortgages and as a result they feel forced into renting. As a result, they postpone, if not forget about, their dream of home ownership and getting on the right track to financial stability.

However, why feel pressured to rent and waste your money when you can Lease Purchase, also known as, Rent to Own? The simple explanation of a lease purchase transaction is that a deal is set up with the home owner in which a standard lease is agreed upon. What is different is that the tenant/buyer is afforded the option, for an agreed upon non-refundable option consideration fee, of purchasing the property at any time during the lease term.

One of the many advantages of lease purchasing is that the tenant/buyer gets to live in the home and decide whether he likes the home or the area. It gives the tenant/buyer the time to determine if the home is in good condition or if it needs major repairs. In short, the tenant gets the opportunity to try out the home before exercising the option to buy. Better still, if the property is not what the tenant/buyer wants by the end of the lease period he does not have to purchase the home. There are no penalties, no hard feelings, or added fees. Remember it is an option, not a requirement, to buy.

As terrific as the above described scenario is, from the tenant’s perspective, it can be taken to the next level. A properly structured Lease Purchase contract can get the tenant/buyer even more advantages than a simple lease purchase deal. A well structured lease purchase deal will allow the tenant/buyer the benefit of having his rent money work for him instead of the landlord. This is possible through a proper deal being negotiated with the right wording and clauses in the contract. For example, one can structure a lease purchase deal that will provide the tenant /buyer with as much as 100% rent credit. A deal like this means that all the monthly rent monies can be credited towards the purchase price of the home if the tenant decides to exercise the option to buy. For example, if the monthly rent of $1000.00 is due on the 1st of each month and the tenant pay’s on time every month, a total of $12,000 is credited towards the purchase price of the house at the end of the year. One must remember, had the tenant rented that same home with a traditional tenant landlord agreement then the whole year of rent money would go directly into the landlord’s pocket and the tenant would have nothing to show for it.

Another advantage is that a tenant/buyer is able to get into a home for as little as 2 to 10% of the purchase price of the home. This payment is referred to as a non-refundable option consideration fee, as mentioned previously. This money is given to the landlord as payment for the option to purchase the property. Depending on the structure of the deal, this money may be also credited towards the purchase price of the home. For example, if the deal required 5% option consideration money and the agreed sale price of the home is $100,000 the tenant /buyer would have to provide $5000.00 upon the agreement of the lease purchase contact. In addition, if the deal was structured to include 100% rent and option money credit then the deal would be as follows: (using the numbers above) $12,000 of rent credit would be applied for the one year of on time rent payments. In addition, $5000.00 of option consideration money would also be credited towards the purchase price for a total credit of $17,000 on the purchase price of the home. That is money that is working for the tenant and not the landlord.

There are many reasons why people decide to rent over owning a home. However, if your ultimate goal is to be a home owner, and you are currently renting, why not consider Lease Purchasing?It allows a renter the time to: build equity through monthly rent credits, build up struggling credit scores so that the banks can approve the mortgage at the end of the lease term, and time to test drive the home and neighbourhood before committing to living there long term.

All the benefits of a lease purchase deal described above demonstrate that good tenants really cannot afford to continue renting in the traditional manner. The only solution for tenants that are looking to get ahead and realize their dream of home ownership, sooner rather than later, is to get into a lease purchase deal and begin building their own personal equity and financial futures today!

My name is Sam Giuliano and I am a Lease Purchase Specialist. I am the owner of RTO Home Solutions which is a lease purchase company located in Toronto, Canada. RTO Home Solutions looks to help home owners find that dream tenant and tenants find their dream home. Lease Purchasing is the answer to plenty of issues that currently exist in the real estate market today. We understand that credit markets are tight in today’s world and getting a mortgage is not easy. Having said all that, we believe that tight credit markets should not hold anyone back from realizing their dream of home ownership. As for the owner/landlords; it is time that you finally got the great tenant you have always deserved! It really is a WIN-WIN solution for everyone. If you are interested in Lease Purchasing homes or would like to learn more about this real estate tool and do your own private deal, set up your own lucrative business, or coach others please contact me at sam@rtoanswers.com.

Author: Sam Giuliano
Article Source: EzineArticles.com
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Are you looking to get your feet wet in real estate but don’t know how to begin. If you ask the more creative and experienced of investors, they would suggest that you look for financial institutions that finance investment property. That is, the golden rule of real estate is to use other people’s money to leverage your investments.

Seasoned investors advise against investing scads of money on a single real estate asset, even if you have the funds to do it – simply because it is too risky a proposition. Moreover, you forego the benefits of leveraging.

Nowadays, several reputable lenders offer finance for up to 95% of the purchase price of the property. The most alluring feature of such schemes is that they cut back on your out of pocket costs when acquiring an investment property. Moreover, the finance is typically available in the shape of a single loan, which can be used to invest further in other properties.

The benefits of financing can be better understood with an example. Let’s assume that you purchase an investment property, without financing, for $150,000. If your expected yield from the property is 10%, then you would get returns of $15,000, which is a 10% return on your investment. On the other hand, if you get your property financed up to 95%, then you would effectively make the same profit on a mere investment of $7,500, which amounts to be an overwhelming 200% return on your investment.

Lenders that finance investment property up to 95% normally offer loans with a 15-year or 30-year term. These loans may either be fixed-rate or adjustable-rate. Lenders verify your credentials, such as your income source, savings and credit score, prior to offering finance. Though low credit scores are permissible by many financial institutions, a healthy credit score does help acquire finance at low interest rates.

While choosing a financial institution that will finance investment property, ensure that you are thorough with the terms of the finance agreement. Although financing your investment property seems like a profitable option, you may not be able to acquire finance for just about any property you desire. Reputable lenders offer finance for no more than 5 investment properties. And this too can be rather tough to accomplish. You need to be eloquent enough to persuade the lender into offering finance.

All in all, it is prudent to seek lenders that finance investment property. Financing empowers you to leap ahead in your real estate career at a rapid pace. It helps you augment your investment portfolio, which leads to significant profits in the long run.

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the Six Day Real Estate Investment Profits Course now at http://www.realestateinvestment101.info/Ahwatukee.html

Author: Joel Teo
Article Source: EzineArticles.com
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Currently I am a mortgage loan underwriter for a huge financial institution. I want to maybe become a real estate agent. My aunt is making killer money. Now is there any way not to take the class and take the test since I already know a lot of real estate? Or what exactly is the whole process to make this career change?