Seller Financing On Home Purchase In Illinois

This BLOG On Seller Financing On Home Purchase Was Updated On May 17, 2017

The housing market has recovered from the real estate market crash and mortgage meltdown of 2008. Illinois was one of the hardest hit states where home values plummeted and the recession affected many residents of Chicago and the state of Illinois.

  • Many homeowners filed bankruptcy and had their homes foreclosed upon because they lost their jobs, had medical emergencies, or went through a divorce due to the real estate and credit market collapse of 2008. 
  • For those homeowners who lost their homes because of filing bankruptcy and/or foreclosure, there are certain waiting periods before they are able to qualify for a mortgage loan. 
  • Seller financing on home purchase was one of the options they had.
  • Consumers who filed bankruptcy, there is a two year waiting period before they can qualify for a FHA Loan.
  • People who had a foreclosure, the waiting period is three years from the recorded date of the foreclosure and/or date of sheriff’s sale or the date the recorded date the deed was transferred out of their name to qualify for a FHA Loan. 
  • For those folks who have filed bankruptcy and/or had a foreclosure, buying a house with seller financing on home purchase was a great option.
  • Seller financing on home purchase is a short term bridge loan and eventually these homeowners need to refinance their seller financing on home purchase with a traditional loan term FHA or Conventional Loan.

Home Buyers With Seller Financing On Home Purchase

For those who filed bankruptcy and/or had a foreclosure, seller financing on home purchase was a great option to become homeowners again without having to wait the mandatory waiting period. Other home buyers purchase homes using hard money loans or other alternative lending programs where they paid high origination costs and had high interest rates. Seller financing on home purchase and hard money financing were short term loans home buyers used as temporary forms of financing.  These short term loans need to be refinanced once borrowers got their credit re-established and/or met the mandatory waiting period after bankruptcy and/or foreclosure. With seller financing on home purchase, the homeowner has time to do the following:

  • Rebuild credit to qualify for mortgage
  • Wait out the minimum waiting period after bankruptcy, deed in lieu of foreclosure, foreclosure, short sale
  •  Become a homeowner and not miss out on homes in areas where homes are appreciating

Qualifying For Refinance And Pay Off Seller Financing On Home Purchase

Homeowners who purchased homes with seller financing on home purchase can refinance their seller financed homes with FHA or Conventional Loans with no closing costs.

Here are the Refinancing Mortgage Guidelines:

  • FHA allows refinance mortgage loans up to 97,75% Loan To Value
  • FHA allows up to 85% Loan To Value on FHA Cash Out Refinance Mortgages
  • VA allows up to 100% cash out refinance mortgages
  • Fannie Mae and Freddie Mac will allow up to 97% Loan To Value on rate and term conventional refinance mortgages
  • Fannie Mae and Freddie Mac will allow up to 80% Loan To Value on Conventional Loan Refinance Mortgages
  • Non-QM Loans will allow up to 80% Loan To Value Refinance Mortgages and Cash Out Refinance Mortgages

Homeowners who purchased homes with hard money loans or seller financing on home purchase and need to qualify for traditional low interest refinance mortgage loans, contact Gustan Cho at 262-878-1965 or text Gustan on his cell at 262-716-8151 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to take calls and answer any questions.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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