The Keys of Vendor Finance
Even if you have a bad credit rating and have been rejected many times by banks, you don’t need to lose hope that you will be able to get yourself the funding to buy a great house. There are lots of ways to get the finances that you need, without worrying about credit rating.
What you need is to find someone to do Vendor Finance.
Vendor financing is the method where the vendor or the seller establishes a workable payment term that doesn’t need any banks to be involved. You’ll be able to go and buy the property that you want because you’ll have a good payment scheme that you both agreed on. You get the property by paying an agreed-upon deposit with follow-up regular monthly installment payments in accordance with what you and the vendor have agreed on.
Vendor Finance seems to be a lot like Rent to Own.
The main difference is that Rent to Own has a mortgage attached to it while the Vendor Finance method does not. The reason for this is that merchant financing properties don’t have an existing mortgage that the buyer has to include in the payment.
Now, the two are also similar in that the Vendor Finance method calls for you to pay a deposit, a monthly bill according to the agreed upon price and interest as well. The great thing about this kind of financing method is that once the agreement has been reached and all the necessary papers sign, you can go and move in. Another thing that you need to know about Vendor Finance is that there might be a call by the vendor to provide some sort of collateral for the property. However, if you don’t have anything of value to offer the vendor, you can just settle things through the deposit that you initially pay. You also have to be careful when it comes to the daily installments since you are still not the legal owner; you need to make sure that you don’t make any major mistakes.
Pay Down on the purchase price.
Once all this is settled and you’ve started paying monthlies and living in the house, it is in your best interest, if you have the means to do so, to pay as much as you can on your installments. Of course, this is only if you have the extra money on hand at the time. Paying extra means that you’ll be able to pay the whole purchase price a lot sooner; it also means you’ll have less interest to pay.