Why Doesn't Creative Financing Get More Attention? Traditional mortgage lenders use traditional channels to give home buyers most of the financing they need for residential real estate. But most people who want a mortgage don't know that there are other options besides the traditional one, and some of these other options could be better. The reason why these options aren't very popular is because mortgage brokers don't get much or any money from them. Since most loans are started by brokers, it makes sense that these agencies and their workers will steer borrowers toward options that give them a better commission.
The Pros: However, if a borrower has the time and desire to look into other ways to get money to buy real estate, there is a lot of information and resources that can help them buy property without a traditional bank loan. Some of the good things about these kinds of programmes are that they have lower overall costs, less strict documentation requirements, and maybe a big chance to use leverage. Some of the possible risks of these alternative methods include not having a contract guarantee, not being able to take advantage of changes in the market, being rushed for time, and needing to rely on more than one person or organisation.
The Cons: For an inexperienced real estate investor or home buyer, it's usually not a good idea to use these alternative financing methods because of the huge risks and possible problems. Home buyers usually do best with mortgage loans that have predictable and fixed payments, and using unorthodox methods to buy a home can lead to a lot of problems that could make it hard for the owner to keep the property.
Most alternative ways to finance real estate are used by professional and experienced real estate investors who know enough about these methods to know what the worst case scenario is. Investors should only use methods outside of traditional lending channels if they are smart enough and have enough money saved up to deal with any problems that might come up.
