Foreclosures Knoxville TN
Whether you’re looking to upgrade your current home, buy your first home or start buying rental properties, you need to be savvy when it comes to financing. Here are a few ways to finance a real estate investment:
The traditional route taken through banks, credit unions and other home mortgage companies is a great way to finance a real estate investment. However, these days traditional lenders have tightened their lending criteria. Most of them demand a solid credit background for approval. There are also strict criterions of identification and financial documentation to be fulfilled. For those that qualify, they require to pay about 10% down payment.
The main source of real estate financing has been traditional financial institutions such as banks, credit institutions, savings and loan associations etc. However, nowadays a good deal of funding for real estate is also done by non-banking institutions such as insurance companies, investment trusts etc.
These are some of the modern mediums of financing available:
Advanced and smart financing refers to any method of financing besides the traditional method. Investors often try to use as little of their own money as possible.
One of the most prevalent methods is the one in which the seller agrees to carry the note for your purchase. This happens when you find a seller who owns his/her property. They don’t want the property anymore, but they don’t mind receiving a monthly payment on it. Most of the time, however, the seller will place a time limit for when the full payment to be made. This is a very convenient way to finance your investment as long as you remember you’ll need to refinance it later.
Another method is to execute the deal as per existing financing conditions. This means that you buy the property on the condition that the existing financing stay in place. The title is transferred, but the loan will stay in the seller’s name, and the buyer will make the payments. It is a short-term proposition because sellers aren’t going to be very comfortable leaving the loan in their name for an extended period of time. Smart buyers use this method when they don’t want to come up with a down payment, knowing they can refinance in six months and get the loan put in their name. This method is commonly used when buying pre-foreclosure properties.
In some cases, the seller provides a second mortgage. Typically, the second mortgage is large enough to cover most, or all, of a required down payment. For instance, if you know you’re pre-qualified for a loan that will require a 20% down payment, you should make an offer contingent on the seller carrying a note for 20%. This way, you will get into the property without using any of your money and the seller gets the bulk of his equity and makes the deal.
You can opt for lease if you can’t find a way to finance a real estate investment. The lease option allows you to get into the house for little to no down payment, and it gives you the right to buy the property down the road. You can utilise the time to arrange for finance.
For more information on Foreclosures Knoxville TN visit Homes By Lender
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