While the years of easy money made lots of people – including savvy real estate investors who unloaded their speculative holdings at the right time – that world has been changed remarkably.

First there were tightening credit standards – requiring things like proof of income and proper debt to income ratios. They there were the bank and finance company bailouts. Now there is the $700 billion bailout plan.

After that who knows?

There is already rumbling about bailouts of states and industries.

Needless to say, all this financial contraction and new debt obligations on the U.S. taxpayer are dramatically changing the financial landscape. Hopefully for the better. (But probably not since it is likely the same bunch of legislators will just keep getting elected again and again. But that’s another story.)

For those who started investing in the early 21st century, this monumental tranformation that is occuring is devastating. But for old timers, the folks who had to work in the old financial system where a 10% down mortgage was a great rarity, you are going to be coming back to all the techniques that you used in the distant past.

I’m sure as new finance rules start coming out and money gets a bit looser, there will be many traditional and some new ways to operate in the financial markets to buy and sell real estate as an investment. But until that happens, you will have to get fairly creative to make many deals happen unless you are sitting on a great cash flow or a big pile of cash.

Options you will need to be considering include:

Seller financing – You need to explore why the seller is moving, how much equity they have in the house and if any sort of deal can be arranged where the seller can carry back either a partial or complete mortgage on the property.

Lease-Options You might find lease options to be more popular right now too. Many sellers have already moved to a new house and are eating two mortgages in a market where that problem could last for many more months or even longer. Contact such an owner at the right time and you may find them very amenable to a lease-option situation on very favorable terms.

Partners – Do you have friends or business associates who trust your skills enough to partner with you on various properties? If you do, you might have a nice pool of money and credit standing to move forward on many deals that you couldn’t do before.

REO – More and more properties are going back to the banks. They don’t want them on their books. If the bank is financially strong enough to give a loan on an REO and if you make an interesting enough proposal on the house, they may be favorably inclined to give  you a mortgage on favorable terms. After all, the last thing they want on their books is an empty house that is potentially deteriorating or attracting vagrants.

Retirement Plans – Assuming your retirment plan is of the type to allow real estate investments – and assuming that it still has value after this huge stock market collapse – you can get it restructured so that you can use it as a source of funding. You have your retirement account give you a loan on the property and you repay the retirement account the principal and interest just like you would do to a bank.

There are many other creative alternatives when money is tight. One of the best places to learn more is to go to your local library and find some of the older real estate investing books – books written in the 1970s and 1980s. Many of them are filled with creative ideas that could be dusted off and applied in this time.

It is not available in every state and it is only available for married couples. It is not right for every situation but if you are in a tenancy by the entirety state and married, you should consider using this form of ownership on your deed when you purchase your private residence.

So what is tenancy by the entirety?

Tenancy by the entirety is similar to joint tenancy in that it offers rights of survivorship. In other words, if one spouse dies, the house is immediately owned by the other spouse without probate.

Where tenancy by the entirety differs – and where it gets its great value – is that both spouses must agree before the property becomes subject to one spouse’s creditors. That means that the actions of one spouse by himself or herself cannot do anything that would cause the house to be encumbered. Only jointly agreed to debts can cause an encumberance on the house.

So what is a practical example of how tenancy by the entirety can benefit you?

Lets assume that one spouse gets sued and gets a judgement against him or her. In this form of ownership the creditors can do nothing that would force the sale of the residence without the consent of the spouse.

There are several nuances to this powerful protection that are best discussed with your real estate attorney when conducting a transaction.

States allowing Tenancy bu the Entirety include:

Alaska
Arkansas
Delaware
District of Columbia
Florida
Hawaii
Illinois
Indiana
Kentucky
Maryland
Massachusetts
Michigan
Mississippi
Mississippi
Missouri
New Jersey
New York
North Carolina
Oklahoma
Oregon
Pennsylvania
Rhode Island
Tennessee
Tennessee
Vermont
Virginia
Wyoming

Junk fees can include:

• Application fee
• Processing fee
• Underwriting fee
• Document preparation fee
• Settlement fee
• Lender’s attorney fee
• Bank inspection fee
• Notary fee
• Document review fee
• Origination fee
• Courier fee
• and many others

Some fees are certainly justified as the mortgage broker is performing a service and deserves to be compensated for it. But others really should be under a lump free – like the processing fee. For instance, the notary fee or the documentation review fee are in my opinion complete junk fees that don’t offer value to the customer. The processing fee should include the cost of a notary (who is most likely a staff member who gets paid whether or not there are documents to notarize) and the cost of a document review. After all, what are they doing with the processing fee if they are not processing your application and making sure all your documents are correct.

A big challenge with junk fees is that you may not know all of the ones a broker will hit you with until you are at the closing table. It can make it very difficult to negotiate any away. After all, if the mortgage broker and you both decide not to budge at the closing table, you ma not be buying that house.

With the market the way it is today, assuming you are credit worthy under the current tight mortgage standards, you actually have a bit of leverage though.

While money is definitely tight right now, a qualified buyer is golden in this period of lean times for mortgage brokers.

So if you are qualified for a mortgage, insist on a list of all fees at the very beginning of the lending process and question the broker about each fee. Any fees that don’t sound like they are giving you good value are points that you can negotiate. You should also get an agreement signed that states that the fees presented are all the fees that you are going to be charged at the closing. (The only exceptions should be prorated fees – like prorated interest and prorations for taxes and such that can only be set based on the actual day of the close.)

Not every lender will negotiate but by insisting on all the details up front, you can make the decision to do business with that lender or seek another mortgage broker while you still have time.

As most of you know, the quickest way, and sometimes the only way, to sell property is through use of seller financing.

When a seller takes back a note for part of the purchase price it is much easier to conclude a sale. Why? One reason is that it makes it easier for the buyer, since banks have fairly strict lending rules, even if a buyer has a good credit rating. Another reason is that the seller can often give more lenient terms.

What if after the sale the seller decides that he really needs part, or all, of the selling price now instead of waiting months, or years. He doesn’t know what the money will be worth in the years to come and he doesn’t know if the buyer will make payments as promised. Of course, there is always the option of foreclosure, but who wants that?

In such a situation, what many sellers do not know is that the note can be sold. If the note-holder does not need all of the balance he can sell only a portion of it and still have income in the future. This can be done, and frequently is, no matter what he has been told. This can result in something like having his cake and eating it too! There are many reasons that a note-holder may need money today rather then in the future; a health issue, sending a child to college, an investment opportunity, and similar situations. So, if any of this applies to you, the reader, or to anyone you know you should investigate the possibility of selling your note and getting money today instead of a long drawn-out future.

About the Author:
Vernon Brabham is a long-time entrepreneur and writer. If you liked this article and want more information go to www.IWillBuyYourNote.com for a free report.

If you are like most people, it is a bit of a mystery,

Fair Isaac has published a free ebook called Understanding your FICO Score which explains in great detail how a FICO score is calculated and why it is used by lenders to determine your creditworthiness.

You can download a copy here.

On the same page, you can also download a free book titled Identity Theft and You. It gives a variety of good tips to protect yourself from identity theft.

There is some good news and some bad news.

First the good news. Buying real estate with no money down is quite possible and with a bit of skill in sniffing out the right deals, can be quite easy to accomplish. But you must understand that no money down really means little or no cash out of your pocket. The deal still requires money but it does not have to be cash out of your pocket.

Some sources of cash for no money down deals are:

• A home equity line of credit against your house
• Your credit cards
• A personal loan
• Loans from relatives or friends
• The seller taking back a mortgage on the house
• A combination of traditional financing that equals 100% of the purchase price
• A 97% FHA loan with a 3% grant created by the seller through one of the many grant programs out there.
• A hard money or private money lender will give 100+% on the right deal

There are many others but this is a good starter list to get the mind thinking about ways to get the cash needed to do a no money down deal.

And remember that to truly do the deal no money down, you will have to come up with a way to cover the closing costs too. If the seller is motivated, these can often be covered by the seller giving a credit at closing to cover these costs. Or else you will just have to borrow a bit from a private source like your credit cards to cover those fees.

Now the bad news. Just because you can get a piece of real estate for no money out of your pocket, does that make it a good deal for you? For a deal to be good, the financials for the property need to make sense.

For instance, if you are rehabbing a property for later resale, you need to be sure that the purchase price/costs plus the repair costs plus the holding cost plus the cost of sale are covered. And after all those costs are covered, you need to be sure that you make a profit for your efforts.

Or if you are purchasing a property to rent, you need to look at your monthly costs vs rental income. Will you be making enough to cover your mortgage payment plus taxes and insurance plus anticipated vacancies and occasional repair and cleaning costs.

If the numbers do not work, the no money down deal that you structured would be a bad investment. However, if the numbers work, it can be a great investment.

When you understand the outcome you desire on a particular house or apartment building, you can then work backwards to figure out how to structure a deal to ensure that your outcome is achieved. Only when you have a deal that can deliver that outcome should you move ahead with a purchase. And if you can structure the deal to be a no money down deal, that is just icing on the cake.

Does that make sense?

The short answer is – it depends. Let’s take a look at a few factors that can make credit cards as a funding source good or bad.

Credit cards come in all flavors but they all boil down to essentially the same thing. They are a source of unsecured credit that can be used for purchases or for cash at some cost. That cost factor depends on whether the use is considered a purchase or a cash advance. It also depends on the particular standard deal and/promotion you have for that particular credit card.

Before deciding if a credit card is a good source for a deal, you need to understand the deal and how the credit card will be used. Let’s examine at a few scenarios.

Scenario 1: You purchase a rehab project and get financing for the project that cover the purchase cost, all the closing costs and the rehab costs. The rehab costs are held in escrow and paid out upon the completion of specific rehab milestones.

In this scenario, if your cash on hand is low, doing the rehab prior to getting the payment from escrow may be a challenge. But if you have available credit on your credit card, you can work with the contractors to buy all the materials on your credit card and if necessary, even get a cash advance from your credit card to pay the contractors.

If you need the credit card to just make purchases of goods and are either doing the labor yourself or have enough cash on hand to pay the contractors as the work is completed, you have a potential good use for a credit card. If your credit card has no balance, chances are you can make the materials purchase for the specific phase of rehab and get reimbursed from escrow for the completion of that phase before the payment is due on the credit card. In essence, you used the credit card for a short term interest free loan. This is a good use of the credit card.

If you need to use the credit card to pay the contractor, there are often two options. And understanding the ramifications of each option will let you control your costs.

The first option is to use a purchase check. Quite often, you can use a purchase check the same as if you buy something at a store with your credit card. In other words, there is no fee to use it and no interest accrues if it is paid off in the next billing cycle. But you need to read the purchase check offer carefully as some credit card offers will treat a purchase check as a cash advance.

The second option is a cash advance. This can be expensive. You will usually immediately get hit with a 2-3% surcharge for taking out cash. And interest, usually at a very high rate, will start accumulating immediately. By the time you pay off a cash advance, even if it is the next billing cycle, you can run up a 5% or more interest charge for that money. And that can get quite expensive if you need to do it multiple times during the project.

Scenario 2: Use your credit card to finance the purchase. If you have enough credit on your credit cards, you can actually use them to finance either the down payment or full purchase price of a less expensive property or a low cost rehab. In our are, low cost rehabs can often be acquired for less than $30,000 and with an additional $20,000 of work, will be back to the neighborhood norm of 65-70K.

Many people who do these deals will go to a hard money lender and pay 3 to 6 points up front plus 15-20% interest. If they are escrowing your rehab, they will charge you inspection fees to release the funds. And if your project takes longer than expected, they may hit you up for another 3 to 6 points to extend the loan. It sounds terribly expensive. And it is. But if it makes the deal work and you make a healthy profit, it is worth the cost.

But suppose you had that same scenario with some credit cards with decent rates. You could use a purchase check or two to buy the property and be paying 7-12% holding costs with no up points to worry about. You could purchase all the supplies for the rehab as you need them. You could make some cash advances from the cards to pay the contractors if you didn’t have the cash on hand. You will not get any additional fees or points appraised if the project runs too long. On an average lower end rehab, using your credit cards responsibly could put thousands of extra dollars into your pocket.

Things to realize when using credit cards:

• Your credit score will greatly affect the amount of credit you can have and the interest rates.
• Your credit score will greatly impact the types of offers you get on purchase checks. Someone with a good credit score may get offers of 0% interest for 12 months on purchase checks used for any purpose – even cash. Others may get a 0% interest offer for 6 months with a 3% fee (up to a maximum of $75) for each check used. Others may get an offer of 7.99% fixed rate for the life of the balance. It all depends on your credit score and the bank.
• When using a credit card, it is best to use one with no balance. And pay it off when the deal is concluded. And never use the credit card in the interim. Many times when you take advantage of a special offer and use the credit card later, you will find that later use charged at the regular interest rate on the card. And that balance will not get paid down until you fully pay down the promotional balance. Again, know and fully understand all the terms of the credit card before using it.

The bottom line. Read your credit card offers carefully and fully understand the terms before using them as a real estate financing source. And if everything looks good – the deal on the property and the credit card terms – use the credit cards without fear. And pay them off as soon as possible.

Choosing the right broker really depends on what you are trying to accomplish. Some examples include

• Purchase a house at retail
• Purchase a foreclosed property
• Purchase a house at a wholesale rate
• Purchase a fixer upper
• Package your house for sale to an end buyer

Many times, the mortgage broker who excels at one situation will not be the one you should use for another situation. For instance, a broker who concentrates on traditional mortgage products will probably not be the person you approach for a 100% financing fixer upper situation.

Lets look at a few scenarios.

You are interested in purchasing houses at foreclosure. Since the typical foreclosure requires a down payment the day of the sale and a very fast closing, you probably would want to work with a hard money lender or a private lender so you already have a pre-approved line of credit to make that quick cash purchase.

You are interested in rehabbing a house. Depending on your situation, you may choose to use a hard money lender to do the rehab with no money out of your pocket. But if you have some cash to work the deal, you may find that you get a much better deal from a traditional broker. In this situation, a traditional broker could save you several thousand dollars in fees and other expenses.

Also, since most of us eventually sell properties – especially single family properties – to end buyers, it is very useful to have a relationship with a mortgage broker who can work with these people. Unlike a traditional Realtor based sale, when you sell yourself, the buyer does not have a Realtor in the loop to suggest mortgage brokers and other people who will help the property close in a timely manner. That task falls to you. So in this situation, it is in your best interest to have an existing relationship with a broker who is familiar with working with the types of people you retail your houses to. If these people are typically somewhat credit challenged, be sure the broker knows the best programs to place your buyer into so that you have the very best chance of closing a deal.

Since different types of brokers serve different needs, it is good to build relationships with several before you actually need them. However, you should keep the list small because you will get much better service when the broker knows you will always come to him for a specific set of services. So, you might have one retail product broker and two or three hard money brokers in your team of support staff.

Until 2007, you would have wanted to have a relationship with several retail products brokers because there were so many subprime products on the market that you needed an array of brokers to cover all the products available. With the demise of the subprime market, you will find that almost all brokers are working with the same set of products. As such, the retail broker’s differentiation really is the service offered to you.

So how do you find good brokers?

The first place to start is by asking other investors who they have successfully used for various investment scenarios. If there is a local real estate club in your area, you will find many people who can make recommendations.

If you are not fortunate enough to live in or near a large city, you will find your local choices much more limiting and may need to extend beyond your local area to find brokers you like working with. This is especially true with hard money lenders. Fortunately, almost everything can be done by phone, fax and mail nowadays so the distance factor is not as important as it was.

Once you come up with a list of brokers – whether it be by referrals, the yellow pages or a search on the Internet – the next step is to check them all out before taking the time to call them. Start with the appropriate branch of the Better Business Bureau to see if there are any complaints against the company. Then do a google search on the company to see if anything comes up. Often, a company will have a clean BBB report but have some comments about them on a real estate investor’s board that you will find with google or your favorite search engine.

From these efforts, you will have a list of brokers to contact. Your next step is to call them all, explain what you do and let them tell you about the products they have which can benefit your business. Ask all the questions you have and get a feel for how knowledgeable the broker is.

• Are the answers coming quick and effortlessly?
• If a question is complex and the broker has to get back to you, does he get back to you in a timely manner?
• Did you feel rushed on the phone or in person?
• Did it seem the broker had better things to do than start to establish a relationship with you?
• Did the broker seem like someone you could work with on a long term basis?
• Do the products fit your investment objectives?

From this conversation, you will either form a good opinion or a bad opinion about the broker. If it is a good opinion, that broker should be added to your support team. If the opinion is bad, you should keep the name in a reject file so you don’t invest time with that person in the future. By doing this several times, you will develop a relationship with brokers that can help you with any real estate investment situation you are confronted with. And that means you can always negotiate from a position of strength because you will not have to worry about where the financing will come from. You will already know who you will be working with for that deal.

A mortgage broker is a key component of your real estate success team. In fact, as you have seen, it is good to actually have several mortgage brokers as part of your team. Just as each investment deal you negotiate is just a bit different, the products that are available from the different types of brokers are designed to fit different scenarios. Take the time up front to build this part of your team and you will find your investing will be a much smoother operation than if you wait till after you have a deal in hand.