Mar
2023

Bad Credit Financing is Available to Those Who Need to Borrow Money

Bed credit financing is available to those that need it. However, you may feel that you are out of luck. Perhaps you have heard others say that because you have bad credit you can’t get a loan. Or, maybe you have tried to apply for a loan at a couple banks but you were turned down. This can be a very depressing experience. However, there is an option for you.

There is even bad credit financing available for people who want to buy a car. Do you have a bad FICO score? No worries! You can get approved for a car loan. There is one catch, however. The lower your credit score, the higher the interest will be on the loan. This is the string attached. If you insist on getting a loan, I would suggest you use this opportunity to restore your credit as well. That means instead of getting your dream car, you need to look for something really inexpensive. Then borrow the money necessary to buy it and then pay off the loan on time each month. This is a great way to restore your credit.

So, how do you go about doing this? The first step is not to think about the car you want. Rather, you should first consider your current income and then ask yourself how much of a car payment you can afford each month. Don’t stretch yourself to the limit. Give yourself some cushion in case something happens.

Next, seek out a car that isn’t a lemon, but yet doesn’t cost a fortune either. A car over five years old should do the trick. Ideally, you want to be able to pay it off in three years max, not more. It would be even better if you could pay it off in one or two years.

Now, as you go through this process, there is the possibility of becoming depressed because your finances won’t allow you to get something that you want and is really nice. Do not get discouraged. You need to think long term. Keep reminding your self that this is only for a little while until you can get yourself back on your feet.

Finally, it is time to get the loan. Luckily, even though you have bad credit, there are bad credit financing loan companies out there tripping over themselves for your business. There are whole directories of loaners that you can look through. You should pick three or four loaners to apply to. Don’t be afraid to play them off each other a little. Remember, you don’t have much room to bargain because of your credit. However, telling one loaner that another loaner is giving you a better offer may be enough to get them to come down a bit.

Bad credit financing is available to you. However, before you take out a loan, first make sure you have a plan to pay it back. Don’t just accept the first loan you get. Make them compete so you can get the best rate and use the experience to restore your credit.

May
2022

Owner Financed Homes – More Common Than Ever

With the recent downturn in the economy, it has become a need for home sellers to find alternative ways to sell there home. Owner financing, also known as seller financing or owner-will-carry is the newest trend in selling homes. The basics of owner financing are simple at the core, the seller essentially acts as a bank for the buyer for a given amount of time.

The bonuses are two fold; one the seller opens up the property to a large number of buyers that cannot get conventional financing, typically these are buyers that have credit challenges such as a previous foreclosure or they are paid through self employment. Due to the recent changes in lending guidelines, someone who would easily qualify for a home 3 years ago can no longer qualify even if they have perfect credit.

There is a well know article on the internet stating that these types of transactions are rare, and incredibly hard to come by. This article is of course from 2002. These types of transactions are very common as of 2010. In the past, most home owners who would be willing to sell a home on through owner financing would ask for almost 50% or more of the homes value as a down payment. This was to compensate for the fact that they expected the home owners to make payments over a 30 year term. This is just ridiculous by the standards of today.

Almost 90% of all owner financing transactions occur now because of investment decisions made in the past by house flippers or people expecting the value on their primary home to increase. This has caused a large amount of homes to come onto the market that are nearly paid off, but are no longer wanted due to taxes on the property or an inability to find a renter. Although money may still be owed on the property, the down payment will more than payoff the underlying mortgage.

So what are the terms? This is a question that I get asked on a daily basis from buyers looking to purchase owner finance homes. Of course each home seller is different, but the typical terms are 10% down payment, a 5 year contract with a full payoff expected at the end of the contract and monthly payments on the home amortized over 30 years. Standard practice is to have all payments made through a third party escrow service. The escrow service ensures that all payments are made on the buyers behalf.

It’s a shame that there is so much false information about owner financing on the internet. Most of this information is out dated and paints a very bleak picture about the rarity of owner financed homes. The truth is the modern real estate market has changed and most working realtors like myself that have changed with the market are doing just fine. Almost all currently working real estate agents have worked with an owner financed transaction. They are an excellent alternative to buy and sell a home without the need for bank approval.