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Creative Financing

Creative financing: You’ve heard of it, and, as a seller, the idea sounds pretty attractive. But, do you know everything you need to know about carrying back a second; essentially, about becoming a lender? You better know the same things that financial institutions know - you better know about lender’s title insurance.

It’s time to sell your $150,000 home, a home that you have owned for fifteen years, a home in which you have substantial equity. The loan terms call for a $20,000 down payment from your buyer, a new $100,000 loan from a local savings and loan, and for you, the seller, to carry back a note for the remaining $30,000.

Will you, the seller, need title insurance?

Yes, you will. Everyone who retains an interest in the property needs title insurance. When you took on the role of lender, you retained a record title interest which you will want to protect for the term of the loan.

But, why would you need lender’s title insurance when the repayment of your loan is assured by a lien in the form of a recorded deed of trust against the property? What could possibly go wrong?

You must insure yourself for the same reason that financial institutions obtain title insurance - for the protection of your investment. You must be assured that your lien on the property cannot be defeated by a prior lien or other interest in the property, which, if exercised, would wipe out your security.

Anything that involves the new buyer’s ownership rights to the property is of direct interest to you because you are holding the second mortgage. If such ownership rights are in question or defective, you may have trouble collecting your monthly mortgage payments. But, you say, there is nothing in your property’s history that could cause problems: no problems with easements, no problems with boundaries, no problems with rights-of-way.

Contrary to what may be popular belief, these matters are not the only source of title problems; a large proportion of title problems arise out of man’s interaction with man. The fact of a marriage, a divorce, a death, a forgery, a judgment for money damages, a failure to pay state or federal taxes - these occurrences can and usually will affect your rights as a mortgage lender.

As an example of what can befall the lender, did you know that a federal tax lien recorded against your buyer before the loan transaction is concluded may result in the loss of security in your home? Sophisticated mortgage lenders are aware of this possibility as well as many others which could jeopardize their loan security and seek the protection afforded by a lender’s title insurance policy.

If you are considering carrying back a second, be sure to get all the facts regarding the benefits of lender’s title insurance. Your local title insurance company should be happy to provide the information you need.

Article by CLTA

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Pat A. Tracy McKnight Real Estate is the best!  Tracy did everything that came up to make my deal go through.  We had several problems to solve and Tracy was always available to make suggestions and help solve all of them.  The house needed some repair and Tracy obtained several bids for the best price.  The contractor backed out so Tracy found someone else.  Then we had an easement problem which I solved with Tracy's help.  He was always courteous and willing to help.  He is the best.  500 N Maine Street, Gladewater, TX 75647

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J. Garner,  I can not say enough good things about Tracy and Darrell.  They showed my property numerous times over the 3 year period it took to sell my property.  They ran ads in numerous papers in East Texas, including the Dallas Morning News and other papers.  They were very nice and kept me informed all the time. 

When you and your family decide to buy a house, my family strongly recommends Tracy McKnight.  You will never find anyone who is as patient and friendly.  Tracy will treat you as family.  We have had nothing but fun in the home buying process while working with Tracy McKnight.  He is truly a genuine person and will do everything possible to make the experience of home buying great! A and J Hernandez

Pat A. Tracy McKnight Real Estate is the best!  Tracy did everything that came up to make my deal go through.  We had several problems to solve and Tracy was always available to make suggestions and help solve all of them.  The house needed some repair and Tracy obtained several bids for the best price.  The contractor backed out so Tracy found someone else.  Then we had an easement problem which I solved with Tracy's help.  He was always courteous and willing to help.  He is the best.  500 N Maine Street, Gladewater, TX 75647

 

JOHN AND MARY JANE S. - "We would like to express our appreciation for Mr. McKnight helping us find our house in a great location in Longview, Tx. Being out of town he was so helpful keeping us informed as to what was available.  When we would come here he was always available to show us the houses.  We are glad to recommend Mr. McKnight to anyone planning to buy or sell their house." 

 E. and M. Stephenson "I can honestly say that Tracy McKnight Realty was above and beyond my expectations on sales and service.  Everything was done in a non-pressure attitude.  He never tried to push anything down our throats and was more than willing to show us several homes.  He even went the extra mile and helped us with inspectors and etc.  After the sale was complete he checked back with us to make sure everything was okay.  During the transaction period he made several trips to our shop in order for us to sign documents.  Courtesy, dignity, and honesty is my opinion of McKnight Realty.  They make you feel like you're the only customer when dealing with your business.  They seem like part of our extended family.  Would and will do all my realty business.  Also would refer anybody else to them."

Randall and Michele D. - "Tracy went above and beyond for us as we were looking to sell out house.  Once sold he then went above and beyond helping us buy a house.  A lot of late texts.  He always answered any questions.  We will definitely use Tracy again if we ever sell or buy another house. "

This is to express our heartfelt appreciation for your helpfulness, efficiency, and cooperation during the purchase of our new home.  Throughout the process you constantly kept us informed of all developments.  It was a pleasure to do business with you, and I happily recommend you to anyone seeking a real estate agent.       Cheers,  Bill and Wendy

Thanks for everything you did for Deb and I.  After losing my easement, you stood by me.  Thanks again Tracy.  Phil and Deb R. 

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