In a shifting market, you need to get creative in order to help buyers buy and sellers sell. With that in mind, there are three areas of creative financing you need to be aware of:
- Creative things sellers can do. These can include seller contributions, seller-funded permanent or temporary buydowns, owner financing, contract for deed, seller second loans, lease option and lease purchase, as well as assuming mortgages.
- Creative things buyers can do. These can include gift funds, selling and refinancing existing assets, adding non-occupant co-borrowers, equity transfers, bridge loans, etc.
- Creative things lenders can do. These can include lender-paid buydowns to permanently or temporarily lower interest rates, running scenarios with automated underwriting systems, premium pricing to get the interest rate to absorb the loan cost, and state/city/national grant programs to assist with buying (where buyers can look to private lenders for hard money loans).
The basic financial terms of any real estate transaction are the offer amount, down payment, loan amount, interest rate, and length of the mortgage loan. Since the very first real estate transaction, creative individuals have tinkered with these variables to get houses sold, and the options we just laid out only scratch the surface of what’s possible.
If you’d like to talk more about these creative financing scenarios, don’t hesitate to reach out to us. We’d love to speak with you.
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