Creative Financing – Mortgage Notes and Other Tools

August 17, 2016


Since aboriginal 2006 to the present our cyberbanking arrangement in this country has been in ataxia and decidedly crippled. Hundreds of banks accept already bootless and been closed; hundreds added accept been affected into mergers (shotgun marriages) with stronger banks; hundreds added are operating as “zombie” institutions-they attending like banks and they try to act like banks but they cannot accomplish loans. A lot of of the “too big to fail” banks based in New York, California, or Atlanta arise to be operating normally, but the accuracy is they are not lending to the “little guy”. They are lending to the about traded association primarily. In apparent English, accepting a accommodation from a coffer for the boilerplate borrower is next to impossible.


- Don’t accomplish your business or don’t do the transaction

- Pay all cash-don’t borrow

- Borrower from non-banks-friends, ancestors and clandestine lenders

- Do affairs application non-traditional methods-creative financing


Creative absolute acreage costs is an all-embracing term. It about agency alignment a transaction whereby any and all types of costs is advised to do the deal. A lot of or all of these types of costs appear to abatement alfresco of the accepted government allowable cyberbanking guidelines and restrictions. The costs cars advised do not accommodate to Fannie Mae, Freddie Mac, FHA, VA, or added HUD guidelines.

Examples of “creative” costs cars are: Clandestine Affair Financing, Agent Financing, Coffer lending that does not accede with the HUD guidelines, Exchanging Equities, Lease with Option Financing, Contract for a Deed Financing, Equity Sharing Financing, Home Equity Financing, Credit Card Financing, and any aggregate of the above.


Of all of the assorted types of artistic costs accoutrement mentioned aloft the a lot of accepted and the a lot of calmly accepted is private affair mortgage financing, which includes agent financing.

The basal abstraction is that the coffer is not complex in the transaction and the clandestine affair lender takes the abode of the bank. There are abounding advantages to removing the coffer anatomy the transaction. The capital allowances are:

- Qualifying (accepting) the borrower is the accommodation of the clandestine affair

- Qualifying (accepting) the acreage is the accommodation of the clandestine affair

- The absorption bulk and the account transaction is the accommodation of the clandestine affair

- The ability date of the accommodation (balloon date) is the accommodation of the clandestine affair

- The down transaction bulk is the accommodation of the clandestine affair

- The time all-important to abutting the accommodation is abundant beneath

- A valuable, abiding beck of assets is created

- The absorption becoming may be college than any added accessible investment

All of these benefits, if combined, accomplish clandestine affair mortgage costs a actual able apparatus to could cause a transaction to abutting that contrarily would accept failed. And, additionally, they may action investment allowances not abroad available.


Now, afterwards analytical the allowances of clandestine affair financing, we should, in fairness, attending at the abrogating aspects. No apparatus is the absolute apparatus for all jobs, and no blazon of costs is the absolute blazon of costs for all affairs and for all people.

The abrogating aspects are abbreviated below:

- Emotionally, not anybody is adequate cat-and-mouse for account payments

- Emotionally, not anybody is adequate with cyberbanking data

- Emotionally, not anybody is adequate with a accident of accident

- Emotionally, not anybody is adequate accomplishing something new

- Practically, a lump-sum of banknote may be bare now


It is actual important to candidly and considerately appraise anniversary allotment of the costs transaction. The ambition is to accomplish it be a win-win transaction for both parties. Are the personalities of the borrower and the lender compatible? Has the agenda and mortgage been appropriately structured so that there is a top anticipation that the borrower can accommodated his obligations over the appellation of the loan? Has the lender advancing accurately his approaching charge for banknote breeze assets and lump-sum income?

As with a lot of important things, the devil is in the details!

In consecutive online writing we will appraise some of the added types of “creative financing”.