Rising Rates = Rising Real Estate Contracts

We all know what is coming down the pipe. Rates will rise in the future. This is going to be interesting for individuals
that are selling their homes and have potential buyers that are not able to qualify due to “debt to income” ratio issues. When mortgage rates increase more and more buyers are limited to the amount of home that they are able to purchase via a traditional lending institution, because the money that they are borrowing is going to cost more. Owner Financing can offer a potential home owner the opportunity to purchase a home that they desire vs. a home that they are forced to buy with traditional financing. For example, if the market rate is 7% on a 30 year conventional mortgage, and a seller refinanced the home in today’s market and obtained a 4% interest rate, the seller could offer the buyer a rate of 6% and “Beat the Bank”. This allows the buyer to gain access to the home with out bank qualification, and the seller to make a spread on the amount financed of 2%. Its a potential win-win situation.