Creative Financing:  have you ever heard of this term or met someone that bought a house, rental property or a car with it?

The Cambridge Dictionary defines it as: FINANCE new or unusual ways of legally getting money to finance something such as a home, project, or business; Much of the increase in home ownership has been through creative financing for borrowers with shaky credit.

 Wikipedia defines it as: In real estate, creative financing is non-traditional or uncommon means of buying land or property. The goal of creative financing is generally to purchase, or finance a property, with the buyer/investor using as little of his own money as possible, otherwise known as leveraging, OPM (Other People’s Money).

The Business Dictionary defines it as: Creating an innovative capital structure, and arranging extended loan and trade credit repayment terms, to achieve a level of financial leverage not ordinarily possible.

Essentially, Creative Financing means “You Don’t Have the Money” plain and simple.  This type of financing normally happens when a person doesn’t really have the resources for said item.  It could be a debt to income ratio, no down payment, bad credit or lack of consistent employment.

It is important that one understand this simple fact, if a potential lender or salesman mentions that type of financing…Run because you can’t afford it and it will be a burden not a blessing.

Save up for your purchase and pay cash.  If you are buying a home, save 20% for the down payment and finance using a 15 year convention mortgage.

Get Free Email Updates!

Signup now and receive an email once I publish new content.

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Powered by Optin Forms
What Does Creative Financing Mean?

Leave a Reply

Your email address will not be published. Required fields are marked *