Buying Property with Oklahoma Promissory Note
Also known as a promissory letter, a promissory note is a binding legal tool that cites the borrower's promise to repay a loan to the lender. Some individuals feel like a promissory note shows a lack of trust but is further from reality. The document is meant to assure the lender that the borrower intends to fulfill their part of the deal and ensure the borrower that the lender is not a fraud.
The best part about promissory notes is that anyone can use them when lending money. You don't have to be an established financial institution or bank to issue this document.
Promissory notes are becoming increasingly popular in real estate. Discover more about promissory notes for real estate loans.
Buying a Property without a Mortgage
Unfortunately, not everyone qualifies for a mortgage. Perhaps your credit score is not pleasing to the mortgage lender, or you cannot afford to raise a sufficient down payment. Such scenarios prevent good potential property buyers from achieving their dreams and inconveniences home sellers as it gets harder to find reliable buyers.
This has made more homeowners turn to legal promissory notes to help them get their houses out of the market. With this, sellers can fund the buyer's property purchase and use the property in question as collateral. The buyer only has to raise the agreed down payment and hand it to the seller as a sign of good faith and security.
The seller then hands over the property to the buyer and issues them with a promissory note dictating the amount owed and when it should be paid. The property's deed acts as collateral to ensure the home buyer doesn't default on the payment. Should the buyer fail to pay, the seller seizes the home's deed and down-payment as indicated on the promissory note. The seller has the right to retake the property from the buyer.
Home Loan Repayment with Real Estate Oklahoma Promissory Note
As mentioned, a promissory note is a legally binding tool. This means that the note can be used to keep records of the borrower's ability to repay loans, which then dictates their credit score. If the borrower remains faithful and pays loans on time, they will have a good track record and be deemed trustworthy.
Upon establishing a solid repayment track record, the borrower is better positioned to apply for a traditional mortgage. They can then use the mortgage to repay the seller and get full ownership of the property.
Promissory notes create homeownership opportunities for people who would otherwise not have qualified for a mortgage. This is beneficial during the hard economic downturn when potential property buyers are forced to look beyond traditional financing.
What to Include in a Real Estate Promissory Note
Real estate loans are a big deal, so they should be accompanied by a secured promissory note to mitigate risks.
Lenders, who are, in this case, home sellers, can personalize promissory notes to their liking. But some standard elements must be included in all Oklahoma promissory notes, which are:
Preparing a real estate promissory note can be complex, especially with the many home sale requirements. It requires expertise to avoid making errors. But with our free-to-download Oklahoma promissory note template, you don't need expert knowledge or an attorney to help you draft an effective document.