When you’re looking to buy your first home, it can be difficult to get financing through traditional sources, particularly if you are new to the work force. If you recently graduated from university and started a job that has a lucrative income, it may not take you that long to save up the down payment that traditional lenders want to see. If you save carefully, you might have the down payment within a year, depending on the price of the home that you want. When you go to the bank to apply for your loan, though, you still might even run into problems. Your credit score can be stellar, and your job can provide more than enough income to keep your housing expenses reasonable, but you don’t have a long track record of bringing that income in. The bank just might turn you away, even though you clearly have the means to buy that house.
Even if you have been out of school for some time, if you work for yourself, getting that income verification can be problematic as well. You can have a successful medical practice, but the fact that the income fluctuates from one quarter to the next (and that you don’t have an employer who can verify these numbers for you) can keep you from getting the mortgage that you want. So you can end up having to settle for a house you don’t want, or throw money away by renting a house that suits the luxury you can afford — but just can’t convince a bank to help you with.
Is this fair? The short answer is, Of course not. The new regulations that banks are throwing up in the way of borrowers come, in large part, because of the banks’ own misdeeds that led to the collapse of the housing market in 2008 and 2009. Before the collapse, it was much easier to get approval for a home loan. The banks weren’t doing a whole lot of due diligence on the paperwork that loan applicants were filling out. In fact, they were working so quickly to get approvals through that they didn’t pay much attention at all. The end result was borrowers getting loans that they had no business taking out. If the banks had been a bit more attentive at that time, they might have been able to avoid some of the more draconian regulations that now don’t always make a lot of sense. Should the borrowers have taken out credit they couldn’t afford? Of course not. But the fact that the banks were accepting their applications puts the onus squarely on the lender.
How Does Seller Assisted Financing Work
The good news is that Amansad Financial has helped many people in your situation. Some of our borrowers end up being matched up with private lenders who act like banks, but there are some key differences. The down payment has to be significantly higher than the 5% minimum with traditional institutions. Often the down payment required is 20-25% or greater in urban municipalities, and 30-35% in rural areas. Also, the term of the loan is much shorter, usually between six months and a couple of years. You may not have that much money salted away, and you also may not be able to come up with a way to pay off the note that quickly.
Seller Assist Real Estate
In instances like this, we have had a great deal of success constructing seller assisted financing deals that have gotten our borrowers into the homes they deserve while giving the sellers a chance to make a profit from the transaction. Basically, when you purchase a home with seller assisted financing, the seller acts as your bank. In some situations, the seller keeps making the payments on the home to satisfy his or her mortgage, while you make agreed payments to the seller each month. In other situations, the seller may have almost total equity in the home, and he or she can use your down payment and some additional funds to satisfy their own mortgage, and then you make payments to them directly. Amansad Financial has the experience with both types of transactions to make them work. When the seller reports your solid payment schedule to credit bureaus, your score will go up, and so if you decide to buy a new house down the road and pursue traditional financing, you should find getting approval simpler, particularly if your credit file is simply too new for banks to work with. Give one of our lending specialists a call today!