Creative Financing Now a Common Term

photo credit: doug88888

Creative financing used to be a term that wasnt thrown around that much, it was used for those who wanted a home, car, or vacation, but had little or no credit and little cash. However, creative financing is now a common term and most people, our weakening and shrinking middle class, is forced into creative financing, and it better be creative because banks simply arent lending anymore, not to us common folk anyway.

All these low interest rates sound great, but the problem with them is that these low rates are only available to people who meet the risk requirements, which most of us do not. You need to have good credit, the required income, and homeowner equity of 20-25 percent, which prices most people out of the game. Thats a loan to value ratio (LTVs) of 75-80 percent on new loans.

Not only do most people not have this type of credit these days, but most people simply cannot meet the LTV requirement due to a decline in home prices the last few years. Also, mortgage insurance premiums for LTVs above 80 percent have increased for those of us without the credit banks are now requiring. There goes that strong middle class.

Read the full article from Inman News

Posted on September 07, 2010 11:45:41 by Blog Author