Buying a Vendor Finance Home

Vendor Finance is not a new way to purchase a home. This method of buying and selling property has been around for many years. In fact, it became very popular after the second world war due to credit shortages. So vendor finance became pretty popular for many buyers and sellers because there was no bank finance being offered. It really helped the sellers who needed to make a move elsewhere, because they had a committed purchaser who was prepared to make regular payments to the owner. The buyers were really happy, because it gave them the opportunity to buy a home without needing a bank.

When you compare vendor finance with traditional bank finance, it can really have great advantages for the buyer, because they are not required to apply for a loan with a bank. In most cases, the vendor only wants to see that the buy can actually make the regular payments and only need to see some form of proof of income from the buyer. If the buyer works in their own business it will normally be a simply matter of showing bank statements, paid invoices or any signed contracts with the rate of payments being received. In times of slow economic conditions many credit reporting agencies will not evening be in a position to provide credit reporting for you personally. When this happens, it forces both the vendor and buyer to trust each other based on personality and personal relationships.

Some of the best features of vendor financing for the buyer is that the owner of the property for sale does not have any mortgage attached to the title of the property. This is so important for the buyer, because it means you have very little to be concerned about as far as a mortgage lender coming in and foreclosing on the home, because they will not have any security over the property. Some country even have vendor finance associations setup but we have found these to be more like investor clubs instead of associations. In today’s economic troubled times, vendor financing will become much more popular in one way shape of form.

Over the last fifteen years, we have seen vendor financing becoming more popular for new home purchasers who do not have enough downpayment to satisfy the mortgage company who are offering home loans to people with triple a credit ratings. Examples of the way vendor financing working in these situations, where the buyers have enough income to support the new home loan, but lack the savings history, and work with the vendor to offer them vendor financing for their downpayment. This solution still works for both the vendor and the purchaser, because they both get what they need - a property sold, and a property purchased.

Terms and instalments of vendor finance deposits will be different each time, as no two house purchase will be the same. We have found in lagging economic times, the vendor is prepared to offer deposit finance on interest free terms over periods as long as ten years and not requiring any regular payments. However, when economic times are not so tough, it is not uncommon for the owner to expect to receive regular payments and interest as high as fifteen percent. Either way, if you want to purchase your own home or sell a property that is difficult to sell, well make sure you consider the benefits of vendor financing.

One of the most common comments we hear from people who are new to this concept of vendor financing is that it is not normal, but then again, what is normal these days anyway. If buying or selling a home on full or some vendor finance works for both the owner and purchaser, does it really matter if it’s not considered to be normal? The most important thing for both parties, is that they both get what they want. When this happens, it best described as a win/win deal for the purchaser and seller and that’s all that really counts.