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Creative Financing

By
Real Estate Agent with West USA Realty

Many times people have spoken to me about buying a home, but they were absolutely sure it was out of their reach. They had a down payment, they made good money, but there were some issues on their credit that would not go away without some work, and that would take time.

Good news: I have seldom seen the market so flush with opportunities for people to buy a home, even if their credit is not good. Sellers are doing everything possible to help buyers buy, so the credit wounded buyer needs only to be able to reasonably explain how the problem came about, and what is being done to resolve it, and we are 1/2 way to a transaction. A solid down payment helps alot, but that could reasonable be $5000-$10000 on a $200-300 K home.

The vehicle might be a lease option, a lease purchase, an agreement for sale, there are different ways to go, depending on the circumstances. One can even put a collar on the sales price for the eventual closing ("buyers and sellers agree that the price to be paid for the property at C.O.E., on or before 12/12/2009, and as determined by the lenders appraiser, will be $248,000. An appraised value $10,000 below or above this price will be the strike price accepted by both parties, and the transaction will still be valid. Any appraised value above or below this collar will require renegotiation between the parties. If the parties cannot come to agreement, __% of the buyer's down payment will be refunded, minus any itemized damages beyond regular wear and tear, and the contract will be considered cancelled"). This is in very rough form, and can be personalized to the condition of the property, the size of the down payment, the seller's comfort with the buyers, and their situation, etc.

There has always been a market for those with issues on their credit, but seldom has the need been greater, especially with tightened lending standards. Since the market has still not stabilized, it helps everyone feel a bit more comfortable when clauses are available to give the transaction that extra bit of flexibility.