i have not been able to get a loan to purchase a home, my realtor mentioned that she knows several investors,

Asked by Teresagolightly, 45229 Fri Apr 11, 2008

explain how this works please

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Don Tepper, Agent, Burke, VA
Fri Apr 11, 2008
The investors would provide the money to purchase the home, just as a bank would. You'd borrow the money from the investors. They'd be in first position. You'd make your payments to them.

Investors charge more than banks do...but if you don't qualify for a conventional loan, the investors may be an option. I don't know what the investors would want, but they'd probably expect you to make a substantial down payment or otherwise have at least 20% equity in the property--so, for instance, if the house is worth $100,000, they'd expect to lend no more than $80,000...maybe less. They'll also charge points and the interest rate might be around 12%-14%. Why so high? Because you're more of a risk. The greater the risk, the higher the interest rates, the greater the points, and the more equity they'd want in the property.

Again, I'm just guessing at those figures. But that's the sort of thing the investors I know would expect. So, make sure you understand all the terms and conditions. Get it in writing, then have a lawyer review it.

Hope that helps.
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