Selling a Home - Partnership in Success - Part 8 - Financing
A good series of posts on what home sellers need to do to make sure their ome gets sold. Financing is a strong part of the equation in creating a successful sale!
Selling a Home - Partnership in Success - Part 8 - Financing
In Selling a Home - Partnership in Success - Part 1 - Introduction we went over how we might not be able to change "The Market" but we can control our position in "The Market" while Selling a Home.
In Selling a Home - Partnership in Success - Part 2 - The Objective - we looked at different objectives you might have when Selling a Home.In Selling a Home - Partnership in Success - Part 3 - Positioning Your House we examined different factors that help you position your home in "The Market."
In Selling a Home - Partnership in Success - Part 4 - Condition of Your House was the topic. It is not as simple an issue as you might think.
In Selling a Home - Partnership in Success - Part 5 - Availability of Your Home was the topic.
In Selling a Home - Partnership in Success - Part 6a - Exposure I covered some of the issues in how to get exposure for your home. In the following posts in the series Selling a Home - Partnership in Success - Part 6 we will follow up with some specifics. Part 6b - The MLS, Part 6c - The Internet, and Part 6d - Other Methods.
In Selling a Home - Partnership in Success - Part 7 - Market Timing was the topic.
In Selling a Home - Partnership in Success - Part 8 we will look at Financing.
Now why would a Seller be worried about Financing? There are lots of reasons. The main reason is as a seller you will have to decide if you will take offers with certain types of financing and you will have to have the home in the proper condition to be financed for certain types of lending.
It would be wonderful if everyone paid cash and you would get all of the money fast and easy. The reality is that most people need to finance a property and Cash Buyers tend to want a discount - so to get the most money you often have to wait for financing.
There are three broad types of lending you will see when selling a home:
- Hard Money Lending. This is generally what people use when buying dilapidated properties. They have a high interest rate and a big down payment (these days around 35% or more). If the house you are selling is run down these types of loans are what you will see with the offers. Generally the offers will be much lower than if the home was in good shape.
- Conventional Lending. This is the traditional 20% down loans (or more) that are used in lots of purchases. On some high value homes they are the best loans people can get. Investors would also tend to use Conventional Loans. Generally a Conventional Loan will have fewer restrictions in regard to the condition of the home, but it might have some. The home will have to be generally livable.
- Owner Occupied Government backed loans. This would include FHA, VA and others. If you are will to sell to an FHA or VA buyer you have opened up the market on your home to a lot of buyers. I generally recommend this. However, these loans can take longer to process and they are more stringent on the condition of the home. Lastly they may have lower loan limits than Conventional or other types of lending.
There are some other facets of financing that a Home Seller needs to understand and I will continue this in part 8a
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