There's a flurry of excitement in real estate these days. Mortgage rates are at record lows. Home prices are still incredibly low. Foreclosures are down. New construction is back. "Boomerang Buyers" are coming back to the marketplace after foreclosure. Is it just wishful thinking that 2013 is going to be better than ever for the real estate market?
Perhaps. "Lenders are still scrutinizing property appraisals, reams of income and bank statements, and anything else that could be used to force them to buy back the loan should it default, which means that it is much harder to get a loan than at any time since the 1990s," stated The Wall Street Journal in December. It sounds like if you don't have a credit score of 700, getting a mortgage is still an unattainable goal.
If You're a Seller
If you own your home free and clear, you may want to consider financing the transaction for the buyer. You would assume a higher risk than keeping your money in a bank account, however since savings and other investment accounts are delivering such low interest rates you'd be able to charge a higher interest rate on the buyer. Some experts advise financing the buyer between six and eight percent.
If You're a Buyer
If you're just dying to get into a home but don't want to wait for your credit score to improve, there are lots of seller financing options available to you. Just ask your REALTOR(r) to help you find those properties. You will pay more in time, but it might be the best way to make your home dreams come true in a time frame you like.
Sellers who plan on offering financing to buyers should cover their assets, so to speak. Require the buyer to submit a loan application, check their credit, and require a down payment. Know that you may have to initiate a foreclosure if the transaction doesn't work out the way you'd hoped. And be sure to consult a real estate attorney to make sure you're not getting in over your head.