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Creative Real Estate Financing
By Steve Gillman, Thu Dec 8th
This is the age of creative real estate financing. Maybe you remember when financing meant you saved up enough to put 20% down on a house, and then got a mortgage loan for the other 80%? You can still do that, but there are many more options now. Here are ten of them.
1. Second from sellers. Many banks will allowyou to have as little as 5% into a home purchase, but will then only loan you 80%. The seller can take payments on a second mortgage from you for the other 15%. 2. Manufacturer loans. Manufactured-home companies are arranging financing with 5% or less down for their buyers. This can be as little as $2,500 down if you already have a lot to put down on the home.
3. State government housing programs. Most states have somesort of financing help in the form of a loan-guarantee programor outright loans for low-income buyers. 4. VA mortgage loans. If you have been in the armed services,have a decent job, and can save two or three paychecks, you canprobably get a home with a VA loan. 5. Contract for sale. Calleda "land contract" and other names depending on the part of thecountry you are in, this just means that you make payments tothe seller instead of a bank. It's up to you and them tonegotiate downpayment amount, interest rate, and the term of theloan.
6. Builders gifting programs. In some parts of the country,builders fund foundations that give you a portion of thedownpayment, so you can get into a home with as little as 3%downpayment from your own pocket. FHA and other lenders have sofar approved of or allowed this.
7. FHA mortgage loans. The Farm Home Administration doesn't actually loan the money, but guarantees your loan for the bank,so they can loan up to 97% of the purchase price, depending onthe particular FHA program. 8. Friend and family loans. It may not be from charity that abrother or a friend lends you the money to buy a home. That 7%return might look awfully good if their money is sitting in thebank at 2%. 9. Bank no-doc loans. "No-doc" and "low-doc" loans, meaning noor low documentation requirements, are back, and you can findthem through online banks. They are for those of you with badcredit but 20% to 30% to put down on a home. You don't even needa job. 10. Your credit cards. A risky way, but if you have alow-interest credit card, you can use it to come up with thedownpayment, especially if you can pay it off soon, perhaps witha coming tax refund. The banks generally won't allow this, butyou can combine this with seller financing. So are there more ways to approach real estate financing? Youbet there are. These are just some ways to buy your own home.When you start investing, you can use other techniques forreally creative real estate financing.
About the author:Steve Gillman has invested in real estate for years. To learnmore, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit: http://www.HousesUnderFiftyThousand.com
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