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Alternative Financing Alert

On Behalf of | Mar 21, 2018 | blog

Do possible alternative financing options for an upcoming home purchase interest you? Each financing method may seem attractive, but you will want to learn the facts about each one you consider. Some financing methods to afford a home are not advised and may leave you with little rights. Here are some facts about three better-known alternative financing options.

Seller Financing

Seller financing is perhaps one of the most legitimate alternative financing options. The owner that wants to sell you the real estate must have their property completely paid. The purchase must be officially recorded with the county, and the buyer holds the deed of trust, which affords some protection.

The seller receives mortgage payments from the buyer for an agreed upon amount of time, and if the buyer is late with payments, the seller would have to go through the foreclosure process.

Contract for Deed

In 2005 the state of Texas passed regulations on this type of alternative financing method for real estate. Previously, contract for deed deals were common. This type of deal does not give many rights to the buyer of the property.

In this type of financing, the deed gets withheld from the buyer until complete payment of the loan. In the meantime, even a small infringement on the contract rules could justify the seller to rescind the contract without any refund of monies previously received.

Lease With an Option to Purchase

Lease options, while still done, have stringent rules for execution that leave the seller liable for proper completion of the agreement. As a result, not many of these agreements get undertaken.

One of the strict requirements for this financing is that any lease option older than 180 days is considered an executory contract. This leaves a seller open to regulation from both the consumer protection and property code arenas.

Whether you wish to take advantage of selling your home for a higher selling price by offering seller financing or need to find an alternative way to afford real estate, be sure to get expert advice on your arrangements. Do yourself a favor and make sure that your agreement is in accordance with Texas law.