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House Flipping Which Finance Method To Use?
House Flipping Which Finance Method To Use?
Finance method 1: Loan assumption
The assumption of existing low interest loans is without doubt the easiest and most
inexpensive way to finance a real estate purchase. VA and FHA are loans that
were originated by the previous owners, and are fully assumable by anyone
without the need for qualification issues such as a credit report or loan application.
The only requirement is a small assumption fee.
Finance method 2: Seller financing
Seller financing is where a buyer agrees to purchase a home and pays principal
and interest to the seller, along with a down payment. While the buyer retains
possession of the home, the title remains with the seller until the conditions of the
contract are fulfilled. If at any time you default on the contract, the property reverts
back to the seller.
Finance method 3: Conventional lending.
Conventional loans for real estate purchases are made through savings and loan
associations, as well as banks. If a home does not have an assumable loan, then
a conventional loan is another alternative way to fund the purchase.
Finance method 4: Lease options (or, rent to buy).
If you do not have sufficient funds for a down payment, you may wish to consider
the use of a lease-option to secure the property.
The lease-option is also known as the rent-to-buy. It basically involves you renting
a fixer-upper with the option to buy it at a later date.
In a nutshell, you would pay the seller a small option fee, and rent the property at
market rent. Since the property is run down, the rent is likely to be substantially
low.
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