how does Creative fiancing work when buying a home?

Question

Tommorow me and my husband are going to look at a home that is offering Creative financing. I would like to know more information about how it works, before we jump in.

There are a few opions we were told about. One is 100% financing as long as our credit score is over 520 (it is), and we have the option of a 10% down payment (from family) to help lower our payments, the third option is 500 down and 695 a month afterward. The purchase price of the home is 89,900. What would our monthly payments be if we get 100% financing? what about 10% down? our score is 536.

Answer 1

Loan amount $ 89,900 30 yr fixed at 6.25 % $ 553.53
15 yr fixesd 6.25 % $ 770.82
30yr fixed 6.75 % $ 583.09
15 yr fixed 6.75 % $ 795.53
10 % down 80,910 30 yr fixed 6.25 % $ 495.55
15 $ 691.54
You have to add Property tax, home/mortgage insurance. if they charge you a points, this will be change.
Creative financing is very dangerous in this market. At the beginning of mortgage, it has very low monthly payment; it jump up very high after five years in most case.
It's good way of financing when housing price are going up very high. (You can refinance/sell after five years. You will have high equity build up on your house, because increase on your house value). however this market, your house price may going down a little.
You will be in the deep hole after five years, and you may have to sell your house with loss. Stay away from Creative financing if you can.

Answer 2

With a 536 score 100% financing is more than likely going to come from the seller by way of a lease option or land contract. With 10% down you may qualify for 90% depending on your overall credit. I have been in the mortgage industry for 13yrs and with a 536 score most lenders are only going to offer 85-90%. be careful of seller financing. Your best bet is to get qualified on your own so your best interests are being considered and not the seller's. If you are interested I may be able to help you with that process and if you would like to contact me just email me at [e-mail] or [phone]

Answer 3

I just read a actical about creative financing, or Exotic loans. One example was the borrower only pays the interest on the loan and that for a certain period of time. In the end that loan never pays off and you actually end up paying more than you originally browered. Stay with a conventional loan. Goto yahoo.com > real estate find enter some home buying informaton and a financing calculator should pop up. Enter your purchase price, downpayment info, todays finance rates and the term. The monthly payment comes up. Good Luck

Answer 4

normally the term means alternative financing, such as lease purchase options, seller financing, etc.

Please do yourself a favor and talk to a couple of mortgage brokers in your area first and tell them that you're thinking of buying a 90k house and you want to know how much your mortgage payments will be if you do 100% financing (known as a 80/20 loan) and if you were to put 10% down.

Now if your income, debt, credit and other numbers don't add up or prevent you from getting a loan, then you should look into alternative financing means.

Regards

Answer 5

There are two answers to this question: The first answer is if you do nothing to the property, then it depends of the policies of the bank. Most lenders want to see at least 6 months for the loan to "season" before they will consider refinancing. However, with the current housing market, in which many areas have property values going down, many lenders are stretching this to 12-18 months. The second answer is if you do some work to the property, many lenders will recognize a higher value in as little as 60-90 days.. Keep your receipts for carpet cleaning, landscaping, and make logs of repairs or painting and the like that you do, you can make a case that some remodeling of yours will increase the value of the house. If you do it smart, you can make a case that the home is worth the additional value without the seasoning. Remember, don't lie about any remodeling, painting or repairs you did, but you can often present it in a very positive light. Hope this helps

Answer 6

This really depends on the interest rate that you get. Your credit is in decent shape so you may be able to get a good interest rate which would mean that your payments could be lower. Talk to your mortgage broker as you are wise to be cautious. Make sure that they are telling you everything and answering all of your questions up front. Don't let them get away with skirting your questions.

Answer 7

Just becareful. The more creative you get the higher the interest rate will be. In my opinion the closer you can stay to conventional financing the better off you'll be in ht elong run. Good luck