Creative Financing for Dummies

Don't try this at home!!!

Dyan and I were doing some book shopping at our favorite bookstore (Goodwill) and ran across this title, Creative Home Financing. Wow. An entire book for that? I can sum it up in three words DON’T DO IT! Okay, so maybe I cheated a bit with the contraction. I’ll go ahead and allow four words.

THIS is what got so many people in trouble in the first place! Loans for 100% of the value. Home equity lines of credit for 110% of value. And then the market crashed and suddenly you’re so far underwater on your mortgage that you have to be a certified diver to go down that far.

There are some people out there that are so intense when it comes to their finances that they have managed to buy a nice home with 100% down! They eat beans and rice, live above their parent’s garage, and never go out to see a movie. I’m not suggesting you do that, but if you are going to get a home loan, you MUST have 20% down. If you don’t, you’re going to be paying for PMI Insurance (I know that’s redundant people). You will just be throwing that money down the drain when it could be going to pay down your principle instead. Also make sure you get a 15 yr loan so that you don’t end up paying interest forever. And with just a little creativity on your part, you can get it paid off in even less than 15 years. Something as simple as paying your mortgage every two weeks can have a HUGE impact on the amount of interest you pay and thus shortening the length of the loan.

If you want to get creative with your homes financing, try finding creative ways to get your 20%+ down payment even quicker. I’m sure you can come up with some great ways without moving in with the in-laws.