Where does it say that a lender is entitled to interest payments? Brokers are quick to point out that the internal revenue code will impute interest to transactions where no interest is specified.  This has nothing to do with the fact that nobody is required to charge interest on a loan.  As a matter of fact, the vast majority of money in America is loaned out at zero interest!

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A form of Mortgage or Trust Deed which acts like the Contract-for-Deed described above is the Wrap-Around Mortgage, (or All Inclusive Trust Deed – A.I.T.D.).  In effect, these instruments are used to insulate the Buyer from the original loan terms and liabilities while providing the seller a way to stretch out taxes on gain and other tax advantages on mortgaged property.  Both mortgages and deeds of trust can be ’wrapped’ by additional liens.

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Creative Financing can be used to either buy or control property, or to enhance the profits in particular deals. See this sample deal with a $10,000 profit....

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A lender's fantasy is to have thousands of borrowers, up to their ears in debt, who transfer a major portion of their earnings to him each month in the form of interest and charges. On the other hand, this scenario can be a borrower's worst nightmare. Indiscriminate use of credit has brought even the biggest real estate moguls low. Between them, Bill Zeckendorf, Donald Trump, and Bill Levitt lost $billions because of debt. Using credit can become a habit that's very hard to kick.

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