Real Estate Sales

Creative Financing for Paying Real Estate

Real estate sales in the form of real estate financing options are some of the most creative in any industry. Today, homes can be purchased with no money on a down payment, insanely low interest rates, and high LTV (loan-to-value) lenders offering the majority of your house’s value amount as a loan. Let’s explain how creative real estate finance works and how they impact real estate sales.

To begin, creative real estate finance means looking through multiple financing alternatives of the standard loan + down payment. Real estate sales tactics in the form of creative financing became popular a couple of years ago when housing prices went through the roof and millions of people felt shut out of the real estate market because of a lack of cash and credit.

Real estate investors can start out with creative financing by looking for liberal lenders. Most banks love to assign 70 percent of the total property’s value as a loan to consumers. Keep in mind that there are a small percentage of banks that provide up to 90 percent LTV loans. Real estate sales can also be spurred by contacting mortgage brokers who have contacts with countless property financing sources. Because they have formed relationships with lenders, they may provide you with the highest LTV you want.

Another way for real estate sales to occur is by borrowing against other valuable assets. If your credit score is exceptional, you can raise money for investing in real estate by taking out home equity loans. Even for those with insufficient equity, this is possible. Other assets people can borrow against for real estate sales include retirement accounts, cars, jewelry, paintings, precious coin collections, insurance policies, and that lakeside property in Savannah. Jot down a list of everything you own and you’re be surprised at the number of assets you can borrow against.

Real estate sales can also be increased by selling one home to buy many homes. Instead of turning your homes into collateral, it’s a good idea to downsize if your home is expensive. With the proceeds in selling a multi million dollar home, consumers can buy themselves a vacation home and a smaller primary residence. Of course, this is reserved for individuals who dedicate themselves in living a less extravagant life. Another booster of real estate sales is wraparound mortgages. By definition, it is a second mortgage given by a seller to a buyer when the buyer only makes one loan payment. This type of loan is used when the buyer of a property doesn’t want to lose the benefits of existing low interest rate loan financing. By “wrapping” the current loan with a new wraparound loan at higher interest rates, payments can continue to be paid on the new loan. This form of creative financing is best reserved when interest rates on homes shoot up.

Buying real estate doesn’t mean limiting yourself to a bank loan and standard payments every month. Be creative and find other ways to finance your home. Because of these unconventional and slightly less conventional methods, real estate sales have increased throughout the years with stunning success.