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

Here’s what can happen if you choose the wrong broker for a hard money loan:

1. The broker you pick doesn’t know where to find hard money investors. He tries to put your mortgage through with traditional lenders and gets turned down. He tells you a hard money loan is impossible.

2. Rather than doing any research into the issue, the broker responds to your queries with “Oh, no, we can’t do that. It’s illegal.” You’d be surprised how many will claim that something is illegal when they actually mean “I don’t know anything about that.”

3. Despite never having completed a hard money transaction, your broker is overconfident. He makes outrageous claims without double-checking the facts. He reassures you that you can take out a hard money mortgage without a down payment or that your interest rates will be the same as those given for traditional loans (both false).

As you can see, choosing a hard money mortgage broker is an extremely important decision and can have a big impact on whether or not your loan goes through at all. Unlike traditional transactions, a lot of brokers don’t have any experience with hard money loans and won’t even know where to begin.

I’d suggest gathering references and calling your top picks to get some information about their business and direct experience with hard money loans. Take a look at my complete article How to Choose a Hard Money Mortgage Broker for some of the most important qualities to consider.

photo credit: TheTruthAbout…

See Also:

Answers to Common Hard Money Mortgage Questions

How to Take Out a Hard Money Loan