The current home lending and real estate crisis has resulted in a boom in the private mortgage note business. A private mortgage is a note created by owner financing, also called "owner carried" financing. Desperate house sellers are increasingly becoming the mortgage lender by default as lending institutions have gone in the opposite direction in mortgage lending practices. In the sub-prime days, mortgage companies would let you have a mortgage, often for 100% (or more) if you could just sign your name.
Now, with the exception of government backed mortgages (FHA, VA, USDA), you will need twenty percent down, almost pristine credit and fully proveable monthly income via federal tax documents. Unfortunately, these extremely rigid loan practices have left many very good, low risk home buying prospects out in the cold. This is particularly the case for huge numbers of self-employed homebuyers who in many cases have sufficient money for a down payment ansd good credit. They simply may not be showing a lot of taxable income so as to minimize (legally) their taxes. Their aggressive approach to tax planning means they can't qualify for a home loan. As a result, the home seller needs to step in to save their day.
Now, not every homeowner will not have this option, but it could work great for a lot of homeowners. It will work best for homeowners that have a lot of equity in their home where as it won't work for people with little to no equity. Surprisingly, a lot of home owners aren't even aware that it's possible to sell this newly created note, which is a highly valued marketable asset.
They can even sell their private note to a mortgage buyer (also known as a note buyer) within 3 or 4 months after closing when the note gets a little "seasoning'. Many note buyers will be glad to convert the note into a lump sum of cash. This effectively gives the homeowner an all cash deal and while the seller takes a discount on the private mortgage to turn it into all cash (a dollar today is worth more than a future dollar), it moves the home fast, usually results in the seller getting top dollar and the property can often be sold without any sales commission. The net result is a win/win.
While the Government is throwing trillions of taxpayer dollars at the big banks, the banks still are not lending. Most of them are just hoarding this cheap or even free money or using it for acquiring other companies. As a result the home seller is having to take control of their own destiny, just as independent minded Americans have always done.
Also check out PeertoPeerLending.biz for information on Peer Loans as a means of obtaining private financing.
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