Owner financed homes can be a great way to buy a new home if you are self employed or have credit issues. If the transaction isn’t handled correctly the house could be in foreclosure in a couple months, be involved in an insurance fraud case or when it comes time to refinance what if there are loan balance discrepancies? (Did that last one make sense? If not, you need a Realtor who specializes in Owner Financed Mortgages to help you! Find Out More by Calling Sarah Williams and her Team of Liberty Hill Real Estate Agents.
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If you buy your home with true Owner Financing the seller is the party that needs to be the named insured. That is a very simple process. What if you purchase your new home with a WRAP mortgage, it is very important to get the hazard insurance with the correct parties covered. The underlying mortgage needs to have the insurance applied to the account with the new buyers name and still have the sellers as named insured. We are real estate professionals, we know what needs to be done to keep you and the seller safe, but we always defer to the insurance pros. If you are the seller, you want to make sure if there is claim the funds are used to repair the asset you are holding the mortgage on, right? We know the folks who make sure it is all taken care of correctly.
Some agents who don’t have an insurance professional to handle this aspect of the process and their ignorance can get you in trouble. They just have you buy another insurance policy and keep the other one in place. Having redundant coverage and making claims for the same incident on 2 different companies can be illegal! Remember, you and the seller would have insurance on the same property. Unknowing to you, the seller could make a claim on their insurance too and KAPOW! You are in a lawsuit. This is a commonality when it comes to Texas based Real Estate Agents. A full list of the best real estate in and around Austin Texas can be found by clicking the link.
Imagine this scenario, you pay the seller directly for 3 months and they pocket the money. That’s right, pocket the money and not make the payments to the underlying mortgage. Typically most mortgage companies will start the foreclosure process after 3 months of missed payments. So now you are out your down payment, all the mortgage payments and needing to find a new place to live. There a simple way to insure this doesn’t happen, it is called a third party loan servicing company. The buyer pays the monthly admin fee for this service and it is the best money they will spend on this type of transaction.
Amortization schedule balances have to be close at time to refinancing. This has to be determined BEFORE closing! If the buyers loan balance pays down faster than the sellers when it is time to refinance the seller will have to come to the closing table with money. YES! The seller thought they were unburdened with the financial responsibilities when they sold the house, now a couple years later when their buyer goes to refinance they could be on the hook to pay off their loan! Imagine, your credit is now great and you can get a mortgage with an interest rate a couple points lower than your Owner Financed loan. You are going to be able to reduce your payment by a couple hundred dollars when you complete your refinance but the seller doesn’t have the funds to pay off their loan. A Realtor in Liberty Hill who specializes in Owner Financing will make sure this doesn’t happen to you and keep you safe.
Sarah Williams Team in the Liberty Hill, Texas area has years of experience and hundreds of transactions under our belt to help you through this complex but very legitimate way to buy a home.
Give us a call today 512-215-4987 and feel our energy, experience and enthusiasm for helping you sort through the many owner financed homes for sale in Austin today! Click Here For Sarah Williams Realty Videos.