| The days of obtaining 100 percent financing on | | | | assumes responsibility for the seller's existing |
| investment property from bank mortgages are over. | | | | mortgage. The bank with the existing mortgage can't |
| There are government programs for first time home | | | | stop it because title to the property does not actually |
| buyers, but that excludes investment properties. The | | | | transfer to the buyer until the existing mortgage is |
| traditional methods of buying property with no money | | | | satisfied. |
| down all include owner financing. Here are some | | | | All out owner financing: It is rare to find a seller who |
| examples: | | | | has no debt against a property, but they do exist. |
| Wrap Around Mortgage: This is where a seller | | | | When a seller has no debt they can finance the full |
| finances the property by obtaining a new mortgage | | | | amount of the property investment. This is attractive to |
| that is more than his or her existing mortgage. The | | | | some sellers because they usually will get a higher |
| seller charges the buyer a higher interest rate in most | | | | price than on the open market, and they receive |
| cases. | | | | interest on the amount financed. |
| Seller-Financed Second Mortgage: Here the buyer | | | | After the Savings and Loan crisis there were many |
| gets a new first mortgage and the seller issues a | | | | investors who bought property through the Resolution |
| second mortgage in lieu of a down payment. Most | | | | Trust Corporation for pennies on the dollar and turned |
| lenders will not issue the first mortgage if the second | | | | around and owner financed sales of the real estate |
| mortgage is done at closing, so this is best done | | | | they bought. We will likely see something similar coming |
| privately between the buyer and seller. | | | | out of the current housing crisis. If so, it will be a hey |
| Bond for Deed or Land Contract: Here the buyer | | | | day for savvy real estate investors. |