When a homeowner sells their home in a typical transaction, the buyer goes to the bank and gets either a conventional or government backed loan. That buyer then makes monthly payments (plus interest) to the bank, not to you. That means the bank will profit anywhere from $95,000 to over $481,000 above the typical home sale price!
Don’t let the bank take your home’s value !
When you sell your home with owner or creative financing, YOU get the profit NOT the BANK! There are lots of ways to structure a creative finance deal. From a straight forward owner finance mortgage to a wrap-around mortgage, from a land contract to a subject-to sale. Each method has its own advantages and disadvantages. Each method also has many variations creating tons of options to fit your particular circumstances or situation.
Let’s say you sell your house the “conventional” way. You will either take that cash and pay off existing debts or buy a new home of your own. Then, you’ll take the extra cash and put that in the bank where it will pay you a measly 0.25 – 0.5 percent interest on savings. As of this writing, mortgage rates are roughly 6% and rising! Instead of a conventional sale, use the value in your home as your own personal savings account and EARN money instead of just giving it away to the bank.
What happens if you want to sell, but there isn’t enough equity in your home? Let’s say your home’s market value is $297,000 but you still owe $200,000 on the mortgage. Closing costs can vary from six to ten thousand dollars. Add the realtor’s commission and selling this house the conventional way could cost the homeowner anywhere from $14,900 to $27,000. That means that using this example in a conventional sale, the homeowner would net just $70,000. But, if this exact house sold using owner financing, the homeowner could potentially profit well over $400,000 !
Home sales vary widely by region. In 2020 the average home took 6-9 months to sell. In 2022, that figure dropped to just 71 days! But, as we all know, the housing market has begun to experience some economic issues spurred on in part by rising interest rates. Houses are once again starting to sit unsold. Using creative financing to sell your home, you can not only have the potential for selling your home more quickly, but you also get to EARN those higher interest rates instead of being hit by them. Contact us today and find out how you can become the bank!
Disclaimer: This post is for informational purposes only and does not provide legal, accounting, or financial advice. I am not a lawyer or accountant. Visitors should not rely upon this information as a substitute for legal, accounting, or financial advice. While I make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have a specific problem, you should seek advice from a qualified professional in your own jurisdiction.