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 $1000 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.
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.