Credit, Using it Creatively & Responsibly

Source: https://thinkrealty.com/credit-creatively-responsibly/

I once used a promotional “zero-percent-interest-and-zero-points” cash advance feature on my $25,000-limit credit card to buy a $25,000 property. Then, I refinanced it with a local community bank at 100 percent loan-to-cost (75 percent loan-to-appraised- value) within six months, right before the initial interest free period expired. That credit card line of credit allowed me to purchase a property, have it fixed up and rented, and mortgage it with a long-term loan without my actually…

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Are you contemplating investing in property? However you do not have enough money to do so. In this article is a tip you can use as long as the property seller is willing to negotiate with you.

To be fair, not all sellers will be interested (or even understand) the concept outlined. Your better gamble is to locate a property that the owner has great interest in offering it, whether because they are moving, a divorce settlement, or frustration with the folks renting the property.

Actually, if you maybe currently renting and considering using this approach perhaps the owner would be happy to help you out! There are some variations that may be used depending upon you and your owner. Do they desire the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?

The simplest way is to consider taking over their mortgage obligations – called ‘assuming’ the mortgage. You will need to be approved by the first lender to presume the mortgage. If you cannot get approved for an assumable mortgage you may also try a ‘subject to’ assumption where you merely make repayments while the property remains in the seller’s name.

You take over the original mortgage and get a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time frame – 2 or three years. Instead of having the money stay in a bank they can be getting a high interest over two or three years with the rest due in full at the end of the investment term.

When the term draws to a close you ought to be able to refinance the cost, or else you can sell. Unless you struck a real bad market the value of the house should have risen by then.

A lot of mortgage lenders merely need to make a great investment. While your local bank could still be scared there are lots of financial lenders that would want to make a deal. Financiers like real estate. The mortgage is mostly based on 60-70% of the value of the land, so as long as they understand they get their money back in the value of the property if you default, they do not care what sort of money you make. Conclude the deal with a 2nd mortgage done with the seller. If you default they can eventually foreclose on the property and sell it, settling the existing mortgage with the proceeds.

Now you can see the entire picture. It is good that seller and buyer may work together. In the event they can’t wait for a sale, you may still give them their asking price with a little overall flexibility on their part.

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