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Alternative Financing

Alternate Forms of Financing

• Land contract. Click for detailed information.
   
• Purchase-money mortgage. (Seller financing or owner financing.) Any mortgage in which the seller is the principle lender. See also: Your Mortgage - Seller Financing
   
• Owner-carried second mortgage for the down payment. In this case the seller offers a mortgage that is secondary to the principle lender. These would include so called "Wrap-Around-Loans." See also: Your Mortgage - Seller Financing
   
• Lease/purchase or lease/option. An alternative financing option that allows  home buyers to lease a home with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage. Often there is included an extra amount that is earmarked for deposit to a savings account in which money for a down payment will accumulate. See also: Your Mortgage - Lease Options
   
• Option to purchase. A buyer purchases an option for a specified amount of time giving him/her the right to enter into an purchase agreement for a specified property at a specified price. If the option holder does not exercise the option by the specified time, the option seller keeps the option money and is again free to market the property.
   
• Equity Sharing. Equity Sharing (also known as Tenants In Common) is co-ownership of real estate whereby each of the owners share in the equity and tax benefits of the property according to the portion of their investment.

  There are 3 basic forms of equity sharing:

  • 1. Traditional Transaction, the 'Occupier' lives in the property and pays all expenses; the 'Investor' pays most of the down payment and does not live in the property.
  • 2. 'Co-occupiers' live in the property and split the expenses.
  • 3. 'Joint Venturors' rent out the property and split the expenses and profits.

    See also: Your Mortgage - Equity Sharing Agreements

• Assumption of Mortgage and "Purchase Subject to Mortgage." Both are assumption loans used by a homeowner to finance the sale of property usually when the homeowner (mortgagor) is in financial difficulty and desires to sell the property to avoid foreclosure.
  • An Assumption - is a transfer of the homeowner’s (mortgagor's) existing mortgage to a buyer in which the homeowner is released from any further liability of debt under the assumption.
     
  • A Purchase Subject to Mortgage - is an Assumption mortgage in which the lender (mortgagee) does not release the homeowner (mortgagor) from the note and the homeowner remains liable for the debt should the new buyer default.

The combinations of alternative financing methods are almost endless and limited only by the creativity, needs, and desires of the parties involved.  Owner financing can be effectively utilized to the advantage of both buyers and sellers.

And, yes, RE/MAX Valley. does maintain an inventory of owner-financed properties.  But, more importantly, we are willing to go out and shake some deals loose for you.

By law, we cannot offer legal advice or prepare the final documents.  But, as a real estate broker,  we are equipped to guide you through these transactions together with competent legal professionals.

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See Also:

• Securing a Mortgage; Don't Bite Off More Than You Can Chew

• NAMB Releases Home Mortgage Survey Results on Broker Activity

• Real Estate Guide - Your Mortgage

• MBA - Home Loan Learning Center

• "Home Mortgages: Understanding the Process and Your Right to Fair Lending," Publications and Educational Resources, The Board of Governors, Federal Reserve System.

• "Looking for the Best Mortgage: Shop, Compare, Negotiate," Publications and Educational Resources, The Board of Governors, Federal Reserve System..

• "Looking For The Best Mortgage," Federal Trade Commission

• "Consumer Handbook on Adjustable Rate Mortgages," Publications and Educational Resources, The Board of Governors, Federal Reserve System.

• Avoiding Mortgage Fraud - View a helpful video Freddie Mac posted on "YouTube" to help educate homeowners avoid mortgage fraud.

• Reverse Mortgage - A Retirement Planning Tool for Seniors [PDF, 76 KB]

• Your Mortgage - Assumable Loans

• Selling Your Home - Seller Financing 

• Educational Brochures from National Association of REALTORS^® and its Partners

  1. Learn How to Avoid Foreclosure and Keep Your Home
     Order | Download brochure (PDF 1.7MB) | Download text (PDF 71KB)

  2. How to Avoid Predatory Lending
     Order | Download brochure (PDF 1.2MB) | Download text (PDF 71KB)

  3. Specialty (Nontraditional) Mortgages)
     Order | Download brochure (PDF 718KB) | Download text (PDF 32KB

  4. Traditional Mortgages: Understanding Your Options
     Order | Download brochure (PDF 272KB) | Download text (PDF 56KB)

  5. Learn About FHA Mortgages
     Order | Download brochure (PDF 272KB) | Download text (PDF 56KB)

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