Senior Programs - Split Funding & Seller Financing

Welcome to Smart-Owner!

The Place For Smart Real Estate Solutions

Reverse Mortgages & Seller Financing

Split-funding: Thinking about your future.

Split-funding is also know as Seller Financing which involves the participation of the seller in a Real Estate transaction.

A typical transaction works like this: The buyer pays a small down payment, the seller takes back a loan from the buyer and the house is transferred. There is no bank involved. The seller simply takes the promissory note instead of the full cash amount. The note can then be paid in one lump sum with no interest a few months later or agreed to be paid over several years with a good interest yield.

For people looking for future streams of income "It's a good tool if you've safely invested your money," says Jay Wood, principal at William E. Wood Associates real estate agency in Smithfield, Va. "An owner can finance a piece of real estate and get a good yield out of the buyer — superior over regular bank yields"

Benefits of Split-Funding.

You obtain a larger pool of potential buyers. Did you know many good buyers have difficulty getting a conventional home loan?... split-funding can be used to close a sale that could not be done otherwise.

Less time to close the Sale - Transactions where the buyer needs to work with institutional lenders take longer to close.

Tax-Deferred Benefits - Taxes are paid as payments are received, spreading the taxable gain over time can reduce your tax payments.

Good Interest Earnings - Long-term Seller financing interest rates are usually higher than conventional home loans and money market saving accounts.

Investment Security - Your note is protected by Real Property

Potential retirement vehicle - Seller financing can be a powerful tool for securing passive income during retirement.

Split-funding Sept by Step

With seller financing, the seller takes the place of the bank. The seller and buyer sit down together and work out terms that are beneficial to both parties.
Since this process involves individuals, agreements are usually a lot more comprehensive than when dealing with institutions
The only typical closing costs are recording fees by title and escrow companies.
And the entire process can close within days instead of months.

Programs for Aging Parents

Home is certainly is where the heart is, and it is generally the best place for your parent to be, but at some point it may not be feasible or desirable for an aging parent to stay in his or her own home. She might not want to care for such a large house anymore. She may be isolated and lonely living alone. Her confusion or medical needs may be too extensive for independent living. Her finances may necessitate a move.

Whatever the reasons, when your parent can no longer stay in her own home, it's a major turning point for everyone involved. At some point you must make the decision to move your parent out of the home.

What to do with the House?

It is probable that your parent's house has not been updated in quite some time - sometimes as long as 30 or 40 years. During that time the roof may have aged, the wiring may have become dated and the plumbing may need repair. These are major issues that will prohibit the sale of the house without repair or renovation. For a buyer to get lending approval, the house must be inspected and all deficiencies repaired prior to closing because most buyers expect the house to be in "move-in" condition.

If you don't want the additional burden and cost of repairing or renovating, the house can be sold "as-is" with Split-Funding. Your parent will generate a secure continous income stream that will last to cover her living and medical expenses with all the inherent tax-deferred benefits and best of all... transferrable to the heirs without probate!.

If you are interested in learning more about Split-Funding or believe this option might fit your current needs, Click here for a FREE evaluation of your case or call us now at (800) 957-5502.

Is a Reverse Mortgage a Good Option for You?

By Terri Cullen
From The Wall Street Journal Online

The number of federally insured reverse mortgages jumped 77% to 76,351 from 43,131 in fiscal 2006, according to the National Reverse Mortgage Lenders Association. With a reverse mortgage, homeowners 62 and older can borrow against their home equity, and the loan isn't repaid until the homeowner moves or dies. (Learn more about reverse mortgages here.)

WHAT TO DO: Reverse mortgages sound good, but you may not be able to borrow as much as you think. Use this calculator to see how much you can borrow, based on your age, your home's value and prevailing interest rates. Now factor in costs: Homeowners may pay a fee of up to 8% of the value of their homes. Of that, 2% goes to government to insure the mortgage, 1% to 2% goes to the lender and the rest pays for closing costs. If it's likely you'll need to sell the home in the near term due to financial hardship or illness, a reverse mortgage may not be worth the cost. Instead, consider downsizing to a less-expensive home to free up your equity.

Going in Reverse
Locations with the greatest number of reverse mortgages originated in fiscal 2006.

Location 2006 2005 % Change

Santa Ana, Calif. 5,825 3,067 89.9%

Los Angeles, Calif. 5,758 3,915 47.1%

Sacramento, Calif. 3,625 2,161 67.7%

Coral Gables, Fla. 3,577 1,387 157.9%

San Francisco, Calif. 3,353 2,040 64.4%

New York City, N.Y. 2,492 1,454 71.4%

Fresno, Calif. 2,461 942 161.3%

Phoenix, Ariz. 2,438 720 238.6%

Boston, Mass. 2,263 1,148 97.1%

Denver, Colo. 1,947 1,515 28.5%

Source: The National Reverse Mortgage Lenders Association.

News & Facts

Are reverse mortgages the right direction for older Americans?

By: Jennifer Openshaw

CBS MarketWatch - 01/20/2006

The number of Americans over age 65 is expected to double in the next 30 years to 70 million. We will be living longer. But with one of the lowest savings rates in the world, just what will we live on? In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider but are these mortgages for everybody? Certainly not. See complete article.

About-Face on reverse mortgages

By: Thomas Kostigen

CBS MarketWatch - 01/20/2006

Take the memories and the money and move. That's what the government and financial representatives should be telling senior citizens when it comes to their home sales. Instead, reverse mortgages are the idea being pushed. Reverse mortgages only tap up to 80% of the equity in a home. The interest rate you're paying on what's effectively your own money -- typically two percent annually above the prime lending rate -- eats away at what you'd get too. Plus, you still have to pay property taxes and any homeowners fees. See complete article.

Reverse Mortgages & Seller Financing

News & Facts