What Are Creative Financing Solutions for Clients With Unique Circumstances?


    What Are Creative Financing Solutions for Clients With Unique Circumstances?

    When traditional lending doesn't fit the bill, professionals like a seasoned Mortgage Broker get creative. Alongside their expert advice, we've gathered additional wide-ranging solutions. From peer-to-peer lending to government incentive programs, here are seven innovative financing resources to help clients reach their home ownership goals.

    • Restructure Vehicle and Recreation Debt
    • Leverage Lease-to-Own Agreements
    • Utilize Peer-to-Peer Lending
    • Offer Seller Financing Options
    • Explore Real Estate Crowdfunding
    • Consider Microfinance Opportunities
    • Tap Into Government Incentive Programs

    Restructure Vehicle and Recreation Debt

    Often, when people are purely enjoying and living life to the fullest, they run into the 'Loan and Credit Card Trap,' which creeps up on them. Then, when they need a mortgage, the reality of those credit cards and RV, boat, motorbike, truck, and car loans show up, limiting their home-buying or refinancing ability. When we see this, we often engage with our vehicle and recreation loan partners to restructure these debts. The restructure allows us to: 1. Decrease the loan payments, 2. Consolidate credit cards and lines of credit, 3. Access equity in an RV, boat, motorbike, or vehicle, to use as a down payment. This financing solution has saved clients from several hundred to over $1,000 per month on their payments, improving the mortgage amount they qualify for or providing them with access to several thousand dollars towards their down payment to buy the home they want.

    Keith UtheMortgage Broker, Mortgage Alliance Enrich Mortgage Group

    Leverage Lease-to-Own Agreements

    One creative financing solution I offered to a mortgage client facing unique circumstances was a lease-to-own agreement. The client had a strong income but lacked the necessary down payment and had some credit challenges that prevented them from qualifying for a traditional mortgage.

    Under the lease-to-own agreement, the client leased the property from the seller for a set period, typically 1–3 years, with a portion of each lease payment going towards a future down payment. The sale price of the home was locked in at the start of the lease, giving the client time to save additional funds and improve their credit.

    This arrangement provided several benefits for the client. It allowed them to move into their desired home right away while working on building their down payment and credit. The fixed sale price protected them from potential market increases, and a portion of their lease payments went towards their future ownership stake in the property.

    For the seller, the lease-to-own agreement provided a reliable long-term tenant and a guaranteed sale at a set price. It also allowed them to generate income from the property while the lease was in effect.

    Of course, lease-to-own agreements do come with risks and considerations for both parties. It is crucial that the terms are clearly defined, including the lease length, rental rate, purchase price, and maintenance responsibilities. The client also needed to be diligent in their efforts to save and improve their credit during the lease term to ensure a successful transition to ownership.

    Loretta Kilday
    Loretta KildayDebtCC Spokesperson, Debt Consolidation Care

    Utilize Peer-to-Peer Lending

    Peer-to-peer lending platforms can offer a more personalized lending experience, often operating online, which can streamline the process for borrowers with unusual financial situations. Unlike traditional banks, these platforms enable individuals to receive loans funded by investors who are willing to support loans that might not fit the typical banking criteria. This option is fitting for clients who may not have a perfect credit history but possess the means to repay the loan.

    The interest rates and terms can sometimes be more flexible than those of traditional financial institutions. For clients seeking alternative financing, exploring peer-to-peer lending could present a viable solution.

    Offer Seller Financing Options

    Seller financing emerges as a potent alternative for clients with unique circumstances, particularly when purchasing property. Instead of securing a loan from a bank, the buyer enters into an agreement with the seller, who finances the purchase, often with a more flexible repayment plan. This enables buyers who might struggle with traditional loan approval to make a purchase, and it can be quicker than conventional financing as there are no bank approvals to await.

    Seller financing can also offer tax benefits to the seller. Potential buyers and sellers should consult with real estate professionals to understand how seller financing could work for them.

    Explore Real Estate Crowdfunding

    Crowdfunding for real estate investments opens doors for clients who might not have the large capital typically required to invest in property. Through crowdfunding, small investors can pool their resources to fund real estate projects, which allows them to enter the market without needing substantial funds upfront. This method also spreads the risk among a group of investors, making it a potentially attractive option for clients with unique financial circumstances.

    Real estate crowdfunding platforms have a variety of projects to choose from, suiting different investment strategies. Those interested in exploring this avenue should consider starting their journey into real estate crowdfunding today by researching different platforms.

    Consider Microfinance Opportunities

    Microfinance institutions specialize in providing financial services to entrepreneurs and individuals lacking access to traditional banking. They offer loans, savings, insurance, and other financial products geared toward clients with limited means or unusual financial backgrounds. The loans are generally smaller than what banks offer, making them suitable for starting a small business or funding a personal project.

    Microfinance can be a catalyst for economic development, especially for clients who are typically underserved by conventional financial institutions. If this sounds like a fit, reaching out to a local microfinance institution could pave the way to fulfilling financial goals.

    Tap Into Government Incentive Programs

    Investigating government incentive programs can provide clients with unique circumstances access to special financing solutions that are not widely advertised. These programs might offer loans, grants, or tax incentives that are designed to promote certain activities like first-time homeownership, business startups, or green energy investments. Often, these programs have more lenient qualifying criteria and are aimed at fostering economic development.

    They can be instrumental for clients who meet the specific program requirements. To tap into these resources, search for government incentive programs that align with your financing needs.