If you’re self-employed and trying to buy a house, good luck getting the loan you’re hoping for.
I was just talking with a successful founder of what is now a seven-figure business and because he owns and runs his own company, he didn’t qualify for the home loan he was hoping for.
Imagine having more than a million dollars of money just sitting in the bank and not being able to afford a house because the bank says no. You would think they’d just take the cash out of their bank account and pay for a home out of pocket, but that would wipe out his bank account.
Most people don’t have a million dollars – or $200 thousand dollars for a cheaper house – to just pay for things out of pocket.
The highest-paid positions for the average person in the U.S. are usually self-employed sales positions. Even if you’re not in sales, freelancers and other entrepreneurs that are successful or starting to watch the funds flow in are making serious cash.
So, why is it that we all still rely on banks to tell us that we can’t afford a home when we clearly can?
When I meet people who are having a hard time qualifying for homes not because of life circumstances but because of the bank, I tell them about creative financing.
Whether you can’t drop some serious cash to get into a home, or you just don’t want to, creative financing can not only get you into the house you want, but can do it quicker than a bank ever could.
Creative financing breaks down into two most common strategies:
Seller financing (also called owner financing)
I talk about these all the time because there’s endless possibilities and circumstances you can use these for. I’ve used them from buying small homes to multi-family apartment complexes to cars.
What’s a subject to contract?
Subject to is perfect for when you find a person in a distressed situation who is trying to seller their home.
It can be they’re going through a divorce, they’re looking to relocate quickly for any reason or they can’t sell their home for what they were hoping for because they have no equity in it.
Where I live in Arizona, we’re seeing a lot of preforeclosures pop up because people bought at the height of the market hoping to sell their property for more money that they can’t get now that prices are falling.
A subject to contract lets you buy their property for the amount they ask for, but with 0% extra interest. Instead, you just make their original payments on their mortgage in their name to the bank with the agreement that the home will be yours once it’s paid off.
You don’t need banks' approvals.
What’s seller financing or owner financing?
Seller or owner financing is used for people that outright own their homes or even distressed sellers who owe less on their homes than the typical person.
You agree to buy their home at their asking price, as long as they give you an agreed upon interest rate that’s way below what the banks are asking.
Most of the properties I but are a t0% interest, but in exchange, I give the seller over their asking price.
That way the home sellers leave their properties happy, with a steady flow of money for the future, and with money in their pocket for now.
This is the only way I’ll consider buying and investing in real estate.
It may be the only way entrepreneurs can qualify for a home. And it’s what we teach you how to do in the SubTo community.