If you have ever sold a home and there is money still owed to you, you have a ready source of cash.  As we mentioned in the first financing method, a lender does not want your down payment to be borrowed; unless it is borrowed against an asset.  Money owed you is considered an asset and if it is secured by a tangible property, whether a car, house, or whatever, the note (money owed to you) can be used as collateral for a cash loan which you can then use for your down payment.

 The amount you can borrow is determined by mainly three factors.

                1) The amount that is owed you.

                2) The amount that is paid to you monthly towards the outstanding balance.

                3) How much time is left before the balance owed you is paid off.

 The lender will generally lend an amount that, if amortized for the same amount of time that is left on the money that is due you, creates a monthly payment that is equal to the payment you are receiving.  In other words, let's say that last year, you sold your home that was worth $100,000 dollars.  The buyer gave you $5,000 dollars down and assumed the $60,000 you still owed.  You "carried back" a second mortgage for $35,000 payable within five years with interest only payments of $350 per month.

 The lender would determine the amount he would lend you as follows:

                1.  He would determine that since you sold the property one year ago, the loan will be paid off in four years.

                 2.  He would take note of the fact that you are receiving $350 monthly.

                 3.  He would go to his loan tables to determine what amount of money $350 would pay off if amortized over four years at the current rate of  interest.  In this case, we will assume that their interest rate is 14%. Upon taking all this information into consideration, the lender would write you a check for $12,806.44.


Now, I know that chances are that this section was a little confusing.  But unless you have a substantial background in finance that is to be expected.  However, what is important here, is that you understand fully, this concept. If you have an asset, there is a way to turn it to cash.  The beauty of this particular method is that you can raise the money you need without liquidating any of your assets.  Plus, you make the payments on the money you borrowed, by using the payments received from the money you are owed.   

Do you need help?  Advice?  Professional Consultation-- Professional Forms and Documents to successfully structure your deal?  Click here.

Although, you probably don't have the loan and finance tables required to determine exactly the amount you  can borrow with this method, all you need to do is go to your nearest bank with the information on the loan you are planning to borrow against and any loan officer can tell you within about ten minutes exactly what they can do for you.

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