Generally the goal of creative financing is to use as little of your own money as possible, otherwise known as leveraging, OPM (Other People’s Money).

1. Traditional:

Still best option since interest rates are still low

FHA, VA, Rural Development, Conventional

Credit scores as low as 580

2. Owner finanOcing or seller carry back:

Seller agrees to carry the note

Seller must own property free and clear

Usually need down payment but you can mortgage another property (ie: car, boat, etc)

Bond for Deed, seller hold title but transfers physical ownership

3. Subject to existing financing:

Title is transferred but loan stays in seller’s name

Buyer makes payments

Buyers use this to avoid down payment

“Formal Assumption” must be approved by original lender

“Subject To” the loan can be called by the original lender due to acceleration clauses

4. Lease Option:

Sometimes seller requires down payment or higher rent for security

Sign a lease and a purchase agreement at same time

Option will require money to seller

5. Private Money:

From a private individual or organization

Interest rates are usually higher than the standard lender rates

Record the mortgage/deed

6. Hard Money:

Typically lend 50-70% of the value of the property, regardless of sales price

Credit scores and income over looked

May need down payment and show cash reserves

10-20% interest is common and/or part of the profits

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