Many loan officers take pride in creative financing. They will find ways to help their clients purchase homes; even when the odds seem stacked against them.Private money is also an option, but can come at a very high cost and low loan to values.
Creative financing is a very broad term in the mortgage industry. Creative financing can involve finding non-traditional ways to document income, finding creative ways to finance a home purchase with no money out of pocket, figuring out creative ways to maximize cash flow, among many other things. Consult a mortgage professional to see what kinds of creative financing you may be eligible for.
There are hundreds of different loan programs out there, and yet for one reason or another some people just do not fit into any of these programs. That is when creative financing can really help you get into your dream home, or help you refinance out of a bad situation. A good loan officer will go above and beyond, to find a way to get your home financed and help you meet your financial goals.
There are loan programs that allow you to qualify for a mortgage with less income than is traditionally needed. If you have good credit and feel you can afford your new payment regardless of your debt ratios ask your Preferred Mortgage Professional about "No Income" or "No Ratio" loans.
The term Creative Financing was coined in the late 1970's when high interest rates caused lenders and real estate sales people to have to think of imaginative ways to accomplish the financing on home purchases.
Creative financing does not include committing mortgage fraud, as obvious as it seems. If you don't qualify for a loan due to lack of income, then there's usually very little that can be done. You cannot get a stated income loan and state that you make more money than you do. This is not creative financing, it is fraud.
Creative financing may simply require the mortgage broker or mortgage banker to understand the broad range or loan products that are available.
There is a difference between creative financing and illegal financing. Be sure your mortgage professional understands the legal ramifications of what type of "creative financing" is proposed. There is a wrong way and right way to do everything, and full disclosure is always the best approach when looking for alternative ways of getting a transaction done. While being creative is a strength of a mortgage professional, it needs to have proper guidance and ethics. No one wants to be involved in loan fraud or be accused of violating a federal lending or real estate law.
Creative financing could just mean niche financing, or it could also entail creative deal structuring, both of which need experience and knowledge.
Often, creative financing comes at a higher cost than traditional mortgage solutions. Don't be too quick to assume you will need to get creative in order to get a good loan.
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