Tom Hanna Business and Real Estate

The owner can “carry a second” note and deed of trust (mortgage) for part or all of the downpayment and a mortgage company will loan the rest; the owner’s second helps you qualify for a “nonconforming” loan from a bank, mortgage company or private investor. The worse the credit of the buyer, the higher the actual down payment at the closing table will have to be, but with a sufficient “seller carryback” and down payment combined almost anyone can get a loan somewhere.

The owner can finance with a deferred downpayment (usually in the form of an addition to the monthly payment). That is, the owner can carry both a first and second mortgage, usually with a very short term on the second.

An owner can also sell the home to you on a lease/purchase or lease/option. In some cases, part of the rent may apply to your purchase price when you “exercise the option” to purchase the home. This defers the seller’s closing costs and yours until the expiration of the contract, typically one year. Some lenders will treat the lease/purchase as a refinance, making it much easier to qualify for 100% (or higher) loan-to-value financing.