This is what you do when your bank doesn't approve your for more money
You can save a lot of money, but you’ll never save enough to buy a house.
The housing market adjusts much faster to the economy than any one person can. So, no matter how hard you pinch pennies, you can’t keep up.
So, to get into a house, most people turn to banks to loan them the money they need. How much a bank approves you depends on credit score, credit history, income and a whole slew of other things.
The number one problem I see right now with banks that people are running into is banks aren’t approving people for as much money as they need to actually get into a house.
Interest rates are up, so people can’t afford a monthly mortgage payment. But housing prices are still up over where we’ve seen them historically, so people can’t afford houses.
Where does that leave the average Joe just trying to find a place to live? Or an entrepreneur that makes enough money to afford a home, but their income isn’t considered “safe” by a lender?
You don’t just become homeless. You find another way.
You find creative financing.
Creative financing and finding an agent
Go talk to an agent about buying a house through owner financing or seller financing. They’ve heard of it before, even if they haven’t done many sales that way.
Go talk to an agent about buying through subject to or novation agreements. It’s more than likely that you’ll be doing the explaining about how to buy a house that way.
You seek out an agent to have expertise and guidance while buying a home. So what does that make your agent if you know more about the buying process than they do?
Listen, you can still work with agents when buying homes using creative financing – and I even want more agents to know about how to do this, which is why I work with them – but the best thing for you to do is find the deal yourself and get the house you want.
All it takes is understanding the concepts and knowing when to use them.
When to use owner financing vs. subject to
Owner financing is used to show your sellers what they can gain by going with a monthly payment plan from you instead of an upfront payment from another person who’s using a lender.
Ideally, you show them this by offering them more money than they’re asking for. That’s a great win for them! But it’s also a win for you because if you’re not paying the bank 6-7%, and instead you’re paying the interest of 1-2% to your buyer, you’re saving money, too.
Subject to agreements are used to show your sellers what pain you can solve for them by selling to you. These are often people who are getting divorced, are facing foreclosure or for any other reason need to get out of their home quickly. You can take away the pain of owner their home and take on the payment, so that you own the property.
Essentially, the idea is that while the loan for the house stays in their name, the house is yours because you’re making payments on it.
Using either of these creative financing methods, you don’t need credit history, a good credit score or even to run your credit by anybody. You don’t need a 20% down payment or to be able to afford 6% on hundreds of thousands of dollars.
You just need to find the right seller with a monthly payment you can afford. Then you and the seller both benefit.
It just starts with finding a seller. That’s really easy to do in the SubTo community, where we have the largest network of creative financers across the country doing deals with each other. We also have free contracts to close these deals easily without paying a lawyer.
You could be in your new home in a matter of days if you were a part of SubTo. Or you can wait like everybody else for the market you can’t control to adjust so you can afford one someday.