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Mortgage Broker News | 14 Jan 2013, 07:00 AM Agree 0
Brokers may want to follow the lead of this Alberta veteran. He’s increasingly working for Realtors to create the kind of vendor-finance deals that win buyers time to quality for traditional mortgages, while helping sellers with tougher-to-sell properties.
  • Ron Butler | 15 Jan 2013, 07:28 AM Agree 0
    I have always maintained that the traditional mortgage broker will always have a place offering creative, intelligent advise in specialty situations and this is a great example of that ongoing truth.
  • Broker | 15 Jan 2013, 09:14 AM Agree 0
    What ltv are the sellers usually taking on in this situation ? Small 5% down payments or would they be looking at needing to vendor finance 20-25%
  • Chris Richards - Mortgage Intelligence | 16 Jan 2013, 05:41 AM Agree 0
    The LTV answer depends. Vendor-financing is actually a toolbox of techniques, each with its own risk profile, hence different down payment/deposit requirements. Depending on technique and who holds title, the buyer's "skin in the game" could be as little as 3-4% at one extreme (lease with an option to purchase, aka rent-to-own), 10% in the middle (Agreement for Sale), where title is retained by the seller, and certainly 20%+ at the other end (Vendor-Take-Back mortgage), where title does transfer to the buyer and foreclosure can be a costly and lengthy process. The value the mortgage broker provides is meshing the seller's primary need (which really boils down to a combination of disposal and cash flow management) with the prospective buyer's needs (a path to ownership and interim property control) and proposing the financing options and their respective pros and cons, including risks and risk management. This is a real value-add for the Realtor/Mortgage Broker relationship as both sides need each other to craft and execute a solution for their respective clients.
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