How to Avoid the Extra Costs of Obtaining a Mortgage

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Are you buying a house in this frenetic real estate market? You had better be prepared to bring a boatload of money to the closing table because attempting to secure a mortgage in this market is going to cost you.

After several years of frivolous lending practices - where people with poor credit and no down payment could obtain excessively large loans - banks, lenders, and most importantly: homebuyers are now paying the price.

New Jersey mortgage broker Pamela Brown says, "I've been getting more mortgage applications in the past six months than I've had in years. And unfortunately, I can only put less than half of them into loans."

This trend is happening all around the country, according to the National Association of Realtors. And, in deeply depreciating markets, lenders are even more reluctant to issue loans unless homebuyers put down at least 10%.

What's more, buyers seeking to purchase investment properties are getting hammered even harder. Banks and lenders are telling investors to come up with at least 25%, or even as much as 35% of the purchase price to obtain a loan.

"In situations like these, homebuyers and investors should take advantage of alternative financing methods like seller-carry financing," says Brown.

Seller financing, which is also called owner financing and carry-back financing, is when a homeowner helps to finance a real estate transaction by taking back a second note or by financing the purchase -- if the seller owns the home outright.

Owner financing differs from a traditional loan because a seller does not loan the buyer cash to complete a purchase, as does a lender. Instead, owner financing involves extending a credit against the purchase price of the home while the buyer executes a promissory note and trust deed in the seller's favor.

 

Muhammad Siddique is Real Estate Investor for  years mostly in commercial real estate specially shopping centers, hotels, motels and recommends TRCBVideos.com to convert aticles into Videos automgaically.

 

You should follow me on twitter here or  go http://twitter.com/siddiquem

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