If you want to purchase a home but don’t qualify with traditional lenders, you may still be able to get a loan via creative financing techniques. Whether you have bad credit, a low down payment, self-employment issues, or other problems, there are dozens of realistic and financial sound solutions available. The trick is figuring out how to begin and learning to sort through cheesy offers of “insider information” to find legitimate programs.

With that in mind, here are the three resources you need to get started (a creative financing toolbox, if you will):

1. Basic information on creative financing possibilities. Anyone looking for an alternative loan needs to have a general understanding of what is out there. You can find this by reading our guides on: hard money mortgages, FHA loans, peer-to-peer lending, and seller financing. If someone wants to sell you this “secret” information, tell them to take a hike.

2. A broker / lender who has experience with creative financing. Most brokers never encounter these deals. Even if someone is willing to give it a try, they may not have the insight and connections necessary to make it work. Talk to friends and search your neighborhood for someone who has extensive creative financing experience. They’ll know how to guide you through the process.

3. Some sort of leverage. Three years ago it was possible to get a loan without bringing anything to the table. But, those days are long gone. Even if you’re looking for creative financing, you must bring some sort of leverage or be able to prove your credibility. You won’t need to meet the same tough requirements set by banks. But, every type of creative loan has some requirement. FHA loans require a down payment of 3.5% or more, hard money mortgages require a more substantial amount down, and most seller financing offers are contingent upon the buyer proving his ability to make the monthly payments.

Once you have these three creative financing tools (a general knowledge of the possibilities, an experienced broker, and an understanding of what will be required of you), you’ll be ready to start putting in offers.

photo credit: Hendricks Photos

See Also:

Sellers Turn to Creative Financing as Home Sales Drop

Tags | creative financing, mortgage brokers