Ways To Use Creative Financing To Buy a Home

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What Is Creative Financing?

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Creative financing is any non-conventional loan term used to finance a house. Accepted loans are sold to such fellowships as Freddie Mac and Fannie Mae. They will only buy loans if the borrower considerable with prime credit, the loan is under a definite amount, and there was a down payment. Non-conventional loans, which list for 25% of mortgages in 2006, can have creative financing terms, such as a balloon payment or interest-only payments for a short period. You can also finance a home over this estimate with a jumbo loan. And those with poor reputation can also receive a sub prime loan.

Ways To Use Creative Financing

Creative financing is used to solve problems. For instance, if you don't have a down payment, you could finance your home with two mortgages from distinct lenders. One covers 80% of the home price, the other for 20%. This spreads the risk between financial fellowships and allows you to avoid paying for secret mortgage insurance.

Or maybe you want to buy a home that is above the Accepted mortgage cap - in 2006 the limit was 7,000 for a single-family home. Then you could apply for a jumbo loan with fixed or adjustable rates.

Be A Smart Shopper

The majority of mortgage lenders will contribute creative financing of some sort. In fact, there are even government backed loan programs, such as Fha or Va loans, that are carefully non-conventional. Once you decided on the loan terms you need, shop loan offers. Ask loan estimates from mortgage lenders and brokers. Then compare their rates, fees, and end costs. And make sure you understand all their penalty clauses.

In a short estimate of time you can find a loan with both convenient rates and terms for your financing needs.