NEW YORK – Jan. 20, 2012 – Surveys suggest that a high number of real estate deals are falling apart due to financing issues, and today’s sellers might need to get creative if they want their property to sell. Options to consider:
• Sellers could back a second mortgage for the buyer at an amount that enables the buyer to meet the lender’s downpayment requirements, providing the lender agrees.
• Sell the home “subject to the existing mortgage,” which means the buyers take over the sellers’ existing mortgage payments for a specified time, after which time they must obtain a new loan. This arrangement relieves sellers of their mortgage debt and helps buyers with credit scores too low secure a traditional loan. And while it forces buyers to get a mortgage as specified in the contract, experts say banks will not foreclose if payments are made on time.
• Sellers willing to finance the sale can unload properties for a low downpayment by adding a sweat equity clause to the contract, which requires the buyers to bring the home into tip-top shape. The renovation details are written into the contract, and buyers must complete the repairs by the agreed-upon date to qualify for long-term seller financing.
Source: RealtyBizNews (01/16/2012) Robinson, Donna
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