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Follow on Google News | Seller Financing Expected to Gain Popularity Among Retiring Baby BoomersSeller financing is an ideal marriage between retiring Baby Boomers and those hard-hit by the recession who cannot qualify for institutional home loans.
Current Fannie Mae, Freddie Mac and FHA policies prevent those whose credit has been impacted through a foreclosure, short sale or bankruptcy from getting a new home loan for a number of years. So even if they gain new employment or re-open their businesses, it is almost impossible for them to currently buy another home. At the same time, retiring Baby Boomers often wish to downsize their living arrangements or relocate to another area. Al Kernek, a real estate broker and CEO of Pacifica Endeavors LLC (http://www.BabyBoomerLifeboat.com) Kernek adds, “Buyers benefit too. First, they can buy a home despite being disqualified by institutional lenders. Second, they avoid many of the fees that tradition lenders charge, such as points. Third, the sales cycle is much shorter.” Homeowner seller financing is nothing new. There are several universally accepted forms of carry-back financing. The two most popular are a lease-purchase option and wrap-around (All-Inclusive Trust Deed, or “AITD”) financing. In all cases, it is the seller who decides the credit-worthiness of prospective buyers. Sellers can be assisted in this process by credit reports, standard disclosure forms and experienced real estate professionals. Since carry-back financing is typically secured by a trust deed or mortgage instrument on the property allowing an expedited foreclosure process, carry-back financing is safe and secure when the buyer is carefully screened and the down payment is sufficient to offset recovery costs. Worst case, the seller gets his property back to put it on the market again. The major obstacle to seller financing has been “due on sale” clauses that most lenders include in loan documentation. However, in today’s economic climate lenders are usually open to seller financing that wraps existing property loans. Kernek cautions, “Anyone contemplating offering seller financing should enlist a knowledgeable real estate professional to assist them. Lease-purchase installment sales and AITDs are proven processes. Realtors employ standard forms and checklists to simplify carry-back transactions, avoid pitfalls, minimize risks and ensure legal compliance. Working with a real estate agent simplifies the sale for Baby Boomers, allowing them to confidently focus on the next stage of their lives. With seller financing, Boomers can sell their homes quicker, plus receive a higher return on their equities while enjoying tax benefits and a supplemental income during retirement. What’s not to like?” # # # Affordable marketing solutions and services for small businesses and entrepreneurs, as well as advice, information and resources for BabyBoomers seeking to retire on a limited income. Learn more at http://www.BabyBoomerLifeboat.com End
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