Ways To Use Creative Financing To Buy a Home

March 8, 2007 · Posted in Creative Real estate Financing · Comments Off 

Creative financing allows people, who might not otherwise qualify for a mortgage, buy a home. It can also be used to secure lower payments, which can save you money if you plan to sell or refinance soon. With creative home loans, it still is important that you shop lenders to get the best deal.

What Is Creative Financing?

Creative financing is any non-conventional loan term used to finance a house. Conventional loans are sold to such companies as Freddie Mac and Fannie Mae. They will only buy loans if the borrower qualified with prime credit, the loan is under a certain amount, and there was a down payment. Non-conventional loans, which account for 25% of mortgages in 2006, can have creative financing terms, such as a balloon payment or interest-only payments for a short period. You can also finance a home over this amount with a jumbo loan. And those with poor credit can also receive a sub prime loan.

Ways To Use Creative Financing

Creative financing is used to solve problems. For instance, if you don’t have a down payment, you could finance your home with two mortgages from different lenders. One covers 80% of the home price, the other for 20%. This spreads the risk between financial companies and allows you to avoid paying for private mortgage insurance.

Or maybe you want to purchase a home that is above the conventional mortgage cap – in 2006 the limit was $417,000 for a single-family home. Then you could apply for a jumbo loan with fixed or adjustable rates. Read more

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8 Ways To Use Creative Financing To Buy a Home

March 8, 2007 · Posted in Creative Real estate Financing · Comments Off 

Creative financing techniques really do work for people. Once you know your options, you will be able to discern your own creative way to invest in real estate. The following are several options that will help you become creative with your real estate financing.

Research Online

First, research online, industry publications or by word of mouth for hard money lenders. Hard money lenders are specialists in short-term loans with high interest. You may also want to look into no-doc or low-doc loans. These types of loans require minimal if any, documentation regarding your income or credit. The only draw back to these loans is that you will only be able to borrow up to 80 percent of the purchase price or property value.

Seller Financing

Seller financing is another creative option. Sometimes a bank will loan up to 90 percent and allow a seller to take back a second mortgage from you for 5 percent, leaving you with needing only 5 percent for a down payment.

Land Contracts

Land contracts or “contracts for sale” is another option. This is when the seller lets you make payments and delivers the title upon payment in full.

Use Your Credit Card

You may want to look into using your credit cards for assistance when financing. This is a good idea if you have a low APR rate or are looking to have the real estate for a short period of time, less than six months.

Tap Into Retirement Accounts

People can tap into their retirement accounts to help finance for real estate investments. It is important that if you consider this option that you speak with a tax accountant and/or attorney because the laws are rather complex in this area. Read more

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