Buying A House In Miami With A Loan From Friends And FamilyAugust 29, 2012
Buying a house in Miami, or any other place for that matter, isn’t exactly affordable these days. Countless individuals looking to acquire homes in Miami find it difficult to get their hands on the down payment needed to secure a mortgage.
In such cases, borrowing money from a family member or friend is one option to address the problem. Negotiating with relatives or close friends should be easier than dealing with banks and other financial institutions, so long as those loved ones or buddies have ample resources to lend you the amount of money you need.
However, borrowing money from friends and family is always that easy, as doubts will naturally cross the lenders’ mind. On the other hand, he or she may be more willing to give the loan if you can thoroughly explain all details pertaining to the loan, and how it can benefit the lender.
Here’s the first tip: keep the details of the loan down-to-earth. According to Thomas Fox, the community outreach director of Cambridge Credit Counseling: “Borrowers should be realistic about what a practical repayment plan would be and not try to borrow more than they can repay. You have to treat it the same as any kind of loan and be realistic.”
This means loans rendered by family or friends should be similarly constructed to those loans given by banks or credit unions. Elements such as a promissory note stating the terms of agreement, amount loaned, interest rates and frequency, as well as a deed of trust, should all be included.
Such elements (like having a lien on the mortgaged property, which is held by the lender) will provide security for the borrower and lender, making the lending plus repayment process flow smoother.
Those looking to buy luxury homes in Miami must also explain other ways the loan can benefit the moneylender. One useful point you can highlight is that the interest rate paid to the creditor will likely be more than what they would make from savings or other investments. Moreover, since repayment of the loan is done on a consistent basis, it further benefits the lender by serving as an additional source of income.