Seller Financing (or Vendor Financing) is when the seller (Vendor) is prepared to finance the purchase of their property.
Here is what often happens. The homebuyer negotiates a note with the seller and then makes a monthly payment to the seller. The seller of the property then passes that payment on to the mortgage company.
Everyone, at some point in his or her life has listened to their little voice cautioning them against following a certain action. If you frequently question what you do and think, and veer away from making decisions, then you may be stopping yourself from reaching your fullest potential.
Selling your own home is precisely what I am talking about. Because it may come as a surprise to learn, that most of the problems you will encounter when selling your own home, will be in your own mind.
There is nothing you can’t accomplish if you set your mind to it. And, it is a good thing that these problems are in your head… because that way you are in control. Having advance warning of likely problems when selling your own home, will make the whole home selling process a lot easier to manage.
More definitions for commonly used real estate terms and mortgage terms:
Prequalification
The first stage of a mortgage application where the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage a lender qualifies for.
Pre-paids
Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for several months.
Principal
The amount borrowed for a mortgage loan. In most cases, monthly mortgage payment include both the interest and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the loan).
Property Tax
An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property value assessment. Property Tax is generally paid as part of the mortgage payment.
Real Estate Brokers are independent businesspeople who arrange the sale of real estate owned by others. Some brokers also rent or manage properties on a fee basis.
Brokers usually arrange for title searches when organizing real estate transactions. They also advertise properties for sale, arrange meetings between buyers and sellers so that the details of transactions to be agreed upon pripor to the new owners taking possession of the property.
In some cases a broker may help to arrange suitable financing for the prospective buyer.
Negotiating favorable financing with a lender can often make the difference between success or failure in closing a real estate sale.
Closing a sale could be the primary responsibility of a broker, real estate agent, solicitor or even the lenders.
Some real estate brokers even combine other types of work, such as selling insurance or practicing law, with their real estate business.
A close look at a real estate agents business card may reveal extra designations or qualifications. The letters after the real estate agents name may be an indication that he or she has upskilled rather than just being content to just take the courses needed to get and maintain a real estate license.
Designations are an indication the field in which a real estate agent specializes.
ABR (Accredited Buyer Representative)
ABR denotes a Sales Associate who is qualified to provide buyer representation and is familiar with buyer brokerage and buyer agency issues.
ABRM (Accredited Buyer Representative Manager)
ABRM designation is associated more with brokers, owners and managers wanting to incorporate buyer representation into their daily practice.
CLHMS (Certified Luxury Home Marketing Specialist)
CRP (Certified Relocation Professional)
The requirements for a CRP designation include passing a comprehensive exam pertaining to relocation issues related to corporate policies, appraising, real estate, legal considerations, and family concerns. CRP designation is awarded by the Employee Relocation Council.
CRS (Certified Residential Specialist)
Awarded by the Residential Sales Council a CRS desination stipulates a proven track record in the business, along with advanced education in related areas like finance, marketing and technology.
e-PRO
This is a training program presented entirely online to certify real estate agents and brokers as Internet Professionals. This e-Pro designation may be earned after successfully completing 5 areas presented entirely online.
There are dozens of designations that real estate agents and other real estate professionals pursue for continuing and advanced education. Some of these real estate designations require memberships in organizations, with annual dues. They may also have required a considerable financial outlay in completing a specialized program representing many hours of intense studying.
Homeowners faced with financial or personal problems sometimes sell for the wrong reasons.
The Truth is; they might have been better off, had they thought more about their situation and considered some alternatives. That’s why before putting your home on the market it would pay to: think not only about why you are selling your home, but also consider the alternatives and carefully weigh-up the pros and cons.
When selling a property, being in a state of indecision can be very frustrating and can cause needless stress. Not making a decision, or making the wrong decision, also has its downside.
Don’t only think about your reason for selling - think about the alternatives - then consider the pros and cons before you rush in and put your home on the market. And remember; regardless of your reason for wanting to sell your home, it usually pays to talk your ideas through with a financial and/or legal advisor.
More definitions for commonly used real estate terms and mortgage terms:
MLS (Multiple Listing Service)
A group of brokers joined together in a marketing organization for the purpose of pooling their respective real estate listings. In exchange for a potentially larger audience of buyers, the brokers agree to share commissions.
A Multiple Listing Service combines the listings for all available properties in an area, except For-Sale-By-Owner (FSBO) properties, in one directory or database.
In general, access to a Multiple Listing Service database is restricted to licensed real estate agents. Those agents pay a fee to view the listing database.
Mortgagee
A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.
Mortgage Acceleration Clause
A clause which allows a lender (mortgagee) to demand that the entire balance of the loan be repaid in a lump sum under certain circumstances. This often comes into effect when property is sold, or when title to the property is changed.
A mortgage acceleration clause can also be triggered into action when the loan is refinanced or the borrower defaults on a scheduled payment.
PMI (Private Mortgage Insurance)
Required on virtually all conventional loans with less than 20% downpayment. The payments for PMI are included in a mortgage payment and protects the lender against loan defaulters. On FHA loans, you will pay a MIP (Mortgage Insurance Premium) which accomplishes the same purpose.
Points
1 point is equal to 1% of the loan value, paid at closing. Points can be loan origination fees or "discount points" which reduce the interest rate of the loan (you are actually paying a finance charge up front). As an example, if a lender quotes a rate of 7.5% with 1 + 1 points, 1 point is for the origination fee and 1 point is for the discount fee.
Earnest money is the deposit made by the buyer when the offer is submitted. The amount of paid varies from transaction to transaction.
Perhaps the main purpose of paying "earnest money" is for the buyer to prove to the seller that he or she is a genuine buyer who is serious about wanting to buy the property.
When the offer on the property is submitted, the earnest money will be put into an escrow account by either the buyers real estate broker, the sellers broker or the title company.
If the offer is accepted, the earnest money will be applied to the down payment or closing costs.
If your offer is rejected, your money will be returned to the the person who made the offer.
An escrow account is an account that is established by a lender to pay the real estate taxes, homeowner's insurance and mortgage insurance on behalf of the buyer.
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