How To Buy A Home Without Bank Or Mortgage Financing

Need to know how to buy a home without bank or mortgage financing? The best way to buy a home without bank or mortgage financing is with a seller financed mortgage. This is where the seller carries the mortgage and there is no need for huge closing cost. There are no points; no bank fees and escrow fees are minimal. It is suggested to have the home appraised to get the exact value of the home, not just the opinion of a Broker and seller of the home.  Always use an escrow company who has experience with seller financing contracts.

  1. Finding a Home That Will Allow You to Buy a Home Without Bank or Mortgage Financing. In a buyer's market, seller financing is a suggested selling tool by most Realtor's, but not every home will fit into this criteria. A simple way to find such homes is by doing a MLS (multiple listing) search and find each home listed as, "seller financing" options available. Most agents will give you a free list if you request one.
  2. Talking With the Seller About Seller Financed Mortgages.  It is always good to be represented by either a Broker or Attorney when purchasing any home.  It is impossible for a "lay person" to know all the legal terms used on purchase contracts and escrow instructions. By having an agent represent you, you can be assured of having protection against any future legal problem. Let your agent do the negotiating on terms and arrangements for seller financing to buy a home without a bank.
  3. Writing the Contract to Buy a Home Without a Bank or Mortgage Financing.  All purchase contracts are the same and the contracts will have the same blanks to fill in. A knowledgeable person will know the contingencies to write in to protect you when buying a home without a bank.  All the terms agreed to verbally must be put in the contract. Whatever is in the purchase agreement will be put in the escrow instructions.
  4. Contingencies for a Seller Financed Mortgage.  Some of the main contingencies in a seller financed mortgage will be things like: seller agrees to not place any additional liens on the property being purchased, seller has a right to evict buyer if a payment is missed by more than 40 days, buyer agrees to pay all taxes and insurance and buyer to have quiet enjoyment of the home at all times. Seller will agree also to not require the buyer to refinance the property ever. 
  5. Opening Escrow for Seller Financing. When trying to buy a home without bank or mortgage financing, remember to always use an escrow company who is familiar with this type of financing to protect all the parties. Do not quitclaim the deed into the buyers name until the loan is paid in full. Set up a third entity to hold the deed and thus safeguarding the rights of all parties.  Do not take out a new insurance policy, as this will alert the bank of a change of name and ownership. Also, request a title policy to make sure the seller of the property is the only legal owner. Buying a home without a bank can be easy, if done correctly.
  6. Closing Escrow.  Now is the time to sign the escrow instructions, pay the amount of down payment requested and get the keys to your new home.  It is important to take a cashier's check for the full amount owed. After signing the papers and paying the money, the seller will turn the keys over to you.
  7. Life After Escrow Closes on a Home Purchased Without Bank or Mortgage Financing. The first few moments in your new home should be used to do a walk-thru inspection. Make sure the home is in the exact same condition as it was when you signed the purchase agreement. If anything is wrong, contact the seller immediately. The escrow company should have set up a savings account for you to deposit your monthly payment in each month, so make sure you pay the payments on time. Enjoy your new found home which you purchased without bank or mortgage financing.

Resource: Wall Street Journal

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