July 2015 - Nationwide Secured Capital

Nationwide Secured Capital 5 Star Review

July 28, 2015 by Nationwide Secured Capital

What you need to know if you offer owner financing

July 16, 2015 by Nationwide Secured Capital

When you’re ready to sell your house and are thinking of offering seller financing, there are some things to consider if you want to become the lender on a large financial loan.

Owner, or seller financing is just what it says it is. The buyer does not turn to a bank but instead gets a loan from the person selling the house for the purchase of that house. Owner financing can be considered for all or part of the price of the home.

There may be sellers were are not able to offer the owner financing. Many may need the cash to purchase another home or for some other expense. If the owner is able to sell the house using owner financing, they can set themselves apart from other listings. This is especially helpful in times of saturated markets.

Other advantages for sellers to use seller financing is that the seller can receive a better return on this investment than other investments. Owners can also move the property quickly.

The advantages for the buyer are that the financing is right in front of you. There is no need to go to an outside source and if need to, apply for a jumbo loan. The closing cost might also be covered.

Owner financing is not the traditional way to sell a house but it does not necessarily mean it should not be done. If was more popular in the late 1970’s when interest rates often reached 18 percent. Now it is being offered as the purchase price of houses continue to rise. Along with buyers no longer qualifying for an affordable loan, the sellers can offer financing to increase the pool of potential buyers.

The buyer and the seller will create a real estate note, or a promissory note. For the note to meet the required terms to be enforceable, it must state the loan amount, interest rate, and length of the loan, any goods or services to be used as the guarantee for the debt to be paid, the date the payments are due, the amount due after the interest has been applied, and any default terms.

For the seller to offer seller financing, the money is still tied up in real estate. This does not solve the problem if the owner wants to be clear of the house after it is sold. Money from the sale of the house will come in over a length of time and not in one lump sum. There is always the possibility of the borrower defaulting on the loan too and seller having to go through the eviction/foreclosure process with the borrower.

The disadvantage for the buyer/borrower is that the seller may not always report to credit bureaus which with timely payments, would not improve the buyer’s credit score.

If an owner does decide to offer seller financing, make sure you seek professional advice to review all documents. Know the ramifications before you sign on the dotted line.

Nationwide Secured Capital Review

July 13, 2015 by Nationwide Secured Capital

HOW TO STRUCTURE A NOTE FOR MAXIMUM VALUE

July 13, 2015 by Nationwide Secured Capital

For a Note of maximum value, Consult with the guidelines written below (updated as of July 2015) on how to structure the Seller Financing for the property you are selling.

1.a) Recommended Interest Rate for owner occupied 1-4 Unit Residential:

0-8.5% for a 720+ credit score
0-9.5% for a 600+ credit score
0-11% for below 600 credit score

Add 1% to the rates above for Commercial properties, 2nd homes and vacation properties
Add and additional 1% to all rates Non-owner occupied residential or Commercial properties.

1.b) Credit score of your buyer/borrower(s) should be over 600, preferably over 625. Don’t sell to Buyers with credit scores of under 600, unless you will keep the Note and are happy to deal with added risk of foreclosure due to default – which is a strong possibility. You might think the Bad Credit buyers are the only ones who need Seller Financing to buy a property. That isn’t the case. Self employed buyers, buyers with average credit above 600, and buyers with a number of real estate investments are often turned down at the bank. With Seller Financing, you can attract many Buyers who cannot get traditional lender or bank financing, e.g.:

Self Employed Buyers
Successful investors who own too many properties for the bank
Fair, good, and high credit buyers that just had a divorce, bankruptcy, or a not so recent foreclosure that disqualifies them for a bank loan.

1.c) Include a 5/7/10 year Balloon due date on a 30 yr amortized loan. This makes the loan more valuable, because in the case of rising interest rates, the interest rate can be increased if the buyer does not refinance and payoff the balloon.

1.d) Always get a Cash down payment, zero down loans are heavily discounted on resale:

10% or greater for owner occupied, 20 % recommended

20% or greater for non-owner occupied, 25% recommended

30% or greater for commercial property or a sale of a business

1.e) You can and should sell at FULL market price for the property if you offer Seller Financing.

1.f) You may optionally charge, 1-4 percentage Points for the Seller Financing loan you are providing, and for creating the Note and mortgage documents. This is similar to a bank or lender, and it improves your total cash out from the sale.

1.e) If you do not get the recommended cash down payment, you can create and carry an additional 10% second mortgage loan that you do not sell. In the current tight RE market conditions, this improves the amount investors will pay you for the primary loan that we are purchasing and gives you better total cash out in the long run.

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HOW TO SELL A NOTE – CASH TODAY VERSUS CASH IN THE FUTURE

July 13, 2015 by Nationwide Secured Capital

In many cases, if you are selling a property that is free and clear – and don’t have a better use of the cash that will come from the sale — and you don’t mind watching the taxes, insurance, calling for late or missed payments, and handling any delinquencies- then holding the loan for sale of your property at a good interest rate, is a good financial decision, and can be a good investment.

When you do have a better use for the cash — or simply do not want to deal with the details, work and risks of taking the property back in case of default, then you can Sell your mortgage note to an investor like Nationwide Secured Capital. We will be happy to give you our offers for the note you are creating — and to make suggestions on how you may make your note more valuable.

***STEP 5) Fax to NSC the signed contract of sale, any terms of the Note you want to create (hopefully you have consulted on these with us in advance before finalizing the loan terms to the seller), and the completed 1003 Loan Application and Authorization to Release Credit, 1004 appraisal if you have one — otherwise, a Realtors CMA based on comparable sold properties in the area).

***STEP 6) NSC will do preliminary underwriting review and tells you exactly what we can pay for the Note with this Buyer, based on:

Buyer credit (we obtain the credit report)
Note terms you have indicated, and/or those we recommend
Represented value of property

NSC provides a written purchase agreement for your Note, and will proceed with a purchase of your note that will typically close after the first payment has been received by you.

***STEP 7) You decide if this Buyer is acceptable, based on our review, suggestions to maximize value, and pricing of our offer – and you move forward or turn them down based on credit review and offer on your Note.

***STEP 8) When you decide to move forward, and you sign the NSC purchase agreement, you should order the 1004 appraisal with interior photos, and submit this to us for validation of the property value. All remaining documents are created and submitted, such as the Note, the security agreement(s), Insurance Binder, etc. You close with your Buyer.

***STEP 9) NSC purchases your Note in one of two ways:

We purchase the Note after you receive your first payment. (If Note is from sale of a business, we purchase after the first 4 on time payments are received by you.)

You receive LUMP SUM CASH instead of small monthly payments!

This is a great way to sell your property faster, and collect CASH for your equity, allowing you to MOVE ON NOW to your new home, next project, or next investment!!!

If you have any questions on this process, or to get a consultation appointment (after you have found a Buyer) to discuss structuring the Seller Financing for your property that you are preparing to sell, send email to consult@NationwideSecuredCapital.com

We look forward to hearing from you, and helping you understand how to sell your property FASTER and GET LUMP SUM CASH in your pocket through sale of the Note!

Related Articles

http://nationwidesecuredcapital.com/Sell-My-Note/seller-financing/
http://nationwidesecuredcapital.com/Sell-My-Note/the-process-of-selling-your-property-creating-a-note/
http://nationwidesecuredcapital.com/Sell-My-Note/how-to-sell-a-note-cash-today-versus-cash-in-the-future/
http://nationwidesecuredcapital.com/Sell-My-Note/how-to-structure-a-note-for-maximum-value/

THE PROCESS OF SELLING YOUR PROPERTY & CREATING A NOTE

July 13, 2015 by Nationwide Secured Capital

As a general rule for best value of the Note, we recommend the following basic guidelines in structuring and creating your loan/Note. The guidelines are NOT REQUIREMENTS, however, if you decide to sell with less downpayment than recommended, or with lower interest rate than recommended, or without the recommended documents, or to someone with truly bad credit, you won’t be able to sell your note later at the best pricing. And, in some cases, other buyers won’t even consider your note — although Nationwide Secured Capital Buys More Loans, and can provide cash out from almost any loan you make — the amount of the loan you can sell may be limited.

***STEP 1) For a Note of maximum value, Consult with the guidelines in Part 5 of this Article on how to structure the Seller Financing for the property you are selling.

***STEP 2) Offer and market your property for sale with Seller Financing (owner financing), and with the parameters listed above – at full market price.

Check recent sales in your area and current listings through a realtor. If other sellers have had to drop their price to sell – you do not have to – you can sell at full market price because you are offering Seller Financing to a buyer who does not qualify for a bank loan, and who needs the property. You can even set a slightly higher price – the only limitation is that the house must appraise at or near the sale price you set.
You may want to go ahead and order a 1004 appraisal from a licensed appraiser in advance of marketing the house to help you set the price – and it will greatly aid receiving a firm purchase commitment on your Note

***STEP 3) Find a Buyer. Sign a standard real estate purchase contract with Seller Financing, and be sure that the Seller Financing clause of your contract includes the phrase “financing terms subject to credit review and approval”. This will allow you to set the offered financing terms based on the sellers qualifications or even allow you to exit the contract, if the buyer’s credit does not measure up as a reasonable risk to make the loan .

***STEP 4) Immediately have the Buyer(s) fill out & sign the following forms (available through the NSC website, email consult@NationwideSecuredCapital.com for the link):

Standard 1003 Loan Application
Authorization to Release Credit

***STEP 4) Work with a Note investment firm like Nationwide Secured Capital who will review and make an offer for the loan, with suggestions on how you can maximize value of the loan – See Part 4 following. You may also want to consult a License Mortgage Originator to obtain credit and qualify your buyer according to new Federal Laws for creation of private mortgages.

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