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2010
Is a seller-financed home loan a good option for me?
I am a little credit-challenged at the moment due to some stupid mistakes I made a few years ago, but I am debt-free currently with an annual income of $88K. The only revolving/installment debt I have are 2 car loans for a total of $600/month. Despite my debt/income ratio, though, the payment history is killing me and I cannot get approved for a traditional home mortgage.
Even so, I want to purchase a home and would like to do it before the April 31 deadline for $8K first time homebuyer credit. Since I am still unlikely to be able to qualify for a traditional loan prior to that time, would seller-financing be the way to go? Do they report to the credit bureaus? Are there any specific pitfalls to look for, since I won’t have a realtor guiding me? Is it sort of like renting-to-own??? What would be their rights as lien-holders? I guess I’m afraid of having someone look over me the whole time, like a landlord.
I appreciate your feedback and advice.
Seller financing is an alternative means of financing which would work for you, allowing you to take advantage of the first time home buyer credit. With seller financing, the seller assumes the role which a commercial lender would normally fill. Title and deed are transferred to the buyer, and the seller holds a lien on the property, along with a documented mortgage agreement.
The problem for you ? Such sellers rarely exist. They are unwilling to replace the role of a bank or lender. Yes, you can find ‘rent to own’ or ‘land contract’ arrangements, but neither will transfer deed and title to the buyer, and without such, you will not qualify for the first time home buyer tax credit.
For the most part, seller financing is a tool which exists only between two parties who know each other very well, with explicit trust involved.
Free Credit Report/Elvis Medley
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