Creative Financing – Mortgage Notes and Exchanging

Buying then sell Property Without Needing Bank Money

Simply because banks aren’t lending does not necessarily mean we can’t do property deals. Before money was invented exchanging happened around the globe for centuries. Bank lending and cash isn’t a necessary element of every transaction.


Able has a lot of cows and wishes to balance his animals herd with a few goats. Baker has a lot of goats and wishes to balance his animals herd with a few cows. Able offers Baker one cow for 2 goats. Baker counter-offers three goats for 2 cows. They shake hands and perform the exchange. No cash altered hands. No bank financing was used. An incredible factor just happened: No broker fee, no evaluation fee, no inspection fee, no closing fee, no loan provider points, no documents with no file folder was produced. A seller and buyer met up and told one another the advantages they each searched for-to higher balance their herds.

Then they labored out a mutually fair transaction whereby each got the particular benefit searched for. Presto-an offer ended without needing banks or money. Today, we are able to make use of this same fundamental model to facilitate our property transactions. The bottom line is to pay attention to the advantages offered and also the benefits searched for.

Learn just what another party wants or needs and try to match that which you have using what another party wants or needs. Ignore money ignore involving a financial institution focus of satisfying the advantages searched for by all parties.


Mr. & Mrs. Able have recently take their two bed room, no basement starter house under contract to become closed in thirty days for $275,000 to Mr. & Mrs. Buyer. The Ables have decided to do seller financing for that Mr. & Mrs. Buyer since the Buyers could not be eligible for a bank financing. The Ables can get $35,000 cash lower and bear back a $240,000 first mortgage note bearing 6.5% interest amortized over 3 decades, payable $1,516.96–principal and interest–monthly. Why the Ables offered was simply because they needed a bigger house for his or her growing family.

The Ables cannot be eligible for a bank financing while he is self-employed and the earnings is sporadic regarding as he receives it and irregular within the amounts he does receive. Mrs. Able is really a stay-at-home mother. Mr. & Mrs. Baker, are a mature upon the market couple with a few medical conditions. They would like to sell their present house and transfer to an aided living facility. They intend to make use of the sales proceeds to purchase Bank Cds having to pay 1.25% annual interest this is actually the greatest rate that they’ll get in today’s financial atmosphere.

A couple of years back they planned on earning 4.50% yearly, however that rates are not at hand now. Their property has three bedrooms, two baths, a complete incomplete basement, along with a two car garage. It costs $395,000-perfect for that Able family.

The Ables provide the Bakers full cost for his or her house underneath the following terms: $395,000 total cost $240,000 first mortgage note guaranteed by Buyers note around the 2-bed room ————$155,000 Twenty Five Dollars,000 cash-in the lower payment compensated by Buyer around the 2-bed room ————$130,000 new first mortgage note guaranteed by Bakers 3-bed room house (6.5% annual interest, thirty year amortization, $821.69 monthly)

Review of the transaction

Now, let us check out the benefits flowing from all of these uncomplicated transactions: Mr. & Mrs. Buyer-acquired a household home they can afford, without needing bank financing, which they couldn’t have qualified for anyway Mr. & Mrs. Able-offered a house inside a difficult market, in a fair cost, and received an invaluable first mortgage and funds for his or her equity. Then they used area of the cash and mortgage to purchase a bigger home, in a fair cost. Mr. & Mrs. Baker-offered their house inside a difficult market, in a fair cost, and received two first mortgages notes that compensated them 6.5% interest each, along with a combined payment per month of $2,338.65-way over the fir.25% compensated on Bank Cds.

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