Creative Financing

I am looking at purchasing a house for myself with no money down. I have pretty bad credit (570) and so I can't go through the lender. There is a property I've located but the seller is wanting 6k down. Is there any creative financing where it's going to be a win-win situation or am I just dreaming?? The seller says he's willing to do a l/o but needs 6k down. Can anyone give any advice or tips how I can go about doing this?

Comments(5)

  • knucs2nd April, 2004

    Destrie,

    Sounds like he is an investor. Maybe he will take 3k down and offer to pay more for the house at the end and have the "rent" money taken directly out of your check and deposited into his account.
    Just some thoughts,
    Kelly(WI)

  • JeffAdams2nd April, 2004

    Destrie:
    If I were you I would borrow the money from a relative just to get in. Then you could work on cleaning up your credit and then excercise your option to purchase the property. If this does not work out, why dont you find an owner who is in pre-foreclosure and assume
    subject to. I think the key here is to get your credit cleaned up. Request a copy form the three credit bureaus and dispute all the negatives.

    Best Riches,
    Jeffrey Adam[ Edited by JeffreyAdam on Date 04/03/2004 ]

  • cmyke3rd April, 2004

    Is there anything you can use as collateral to get the $6k? Or maybe $3k if you use Jeff's idea. If there's a will, there's a way. Use anything of value to get the money and do some negotiating with the seller. Asking to pay higher monthly payments to reduce up front cost can still be favorable to the seller because it increases his cash flow. If the payments are reasonable, get this house! It's hard to find an opportunity like this one.

  • swagman3rd April, 2004

    Your credit score, minus any derogatory accounts, is sufficient to receive financing from non-conforming lenders. Most subprime lenders require for there to be less than 2k in collections, if they allow any at all. It is possible to get 100% financing with a mid score in the high 500’s. However, the interest rate will be much higher and you will, more than likely, have a pre-payment penalty. This scenario is, generally, only available for, SF, owner occupied property.
    I would call some mortgage brokers and tell them your situation and go from there (most banks will not touch you).
    However, don’t allow them to pull your credit until you are satisfied that they are knowledgeable and equipped to accommodate you.
    Good luck!

    swagman

  • QuietStorm3rd April, 2004

    You could also try a hard money lender if there is any equity in the property. You could ask seller to take back on a 2nd mortgage with your down payment from a hard money lender. Their rates are usually higher than traditional lenders, but if the numbers still provide a profit for you, it can still work out. You can look in local classified for these type of lenders. They are a lot of lenders out there like this, but you will have to look for them. I found a couple at my local REIA (real estate investors association) handing out flyers.

    If you are having trouble with this and all else fails, you could try assigning (flipping) this to another investor. There should be some of those in the classifieds as well and it can help you build a down payment for your next deal.[ Edited by QuietStorm on Date 04/03/2004 ]

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