Real Estate Financing Made Easy
Can you still recall the time when all you needed to do when purchasing a house was to save up 20% for the down payment and apply for a mortgage loan to shoulder the remaining 80%? Although that can still be done today, but there a whole lot of other ways to help you get your dream home.
1. State housing programs. A vast majority of the states have some kind of financial assistance available for buyers with low-incomes. It could be an outright loan or some sort of loan-guarantee program.
2. Gifting programs. In some areas of the country, there are builders that fund those foundations who are able to provide you with a part of the total downpayment. This way, you will be able to get a home even if you only have 3% of the total downpayment available.
3. Land contract. This is also referred to as “contract for sale”. This kind of financing would have you paying the seller instead of the bank. It would be up to you and the seller to discuss the amount for downpayment, the terms and interest rate of the loan.
4. Seller-carried second mortgages. There are a couple of banks that will let you just have as small as 5% of the total amount, but will let you borrow only 80%. The seller could take payments through another mortgage of yours for the difference.
5. Manufacturer loans. There are a number of companies of manufactured homes that can arrange financing with only 5% or less downpayment for buyers.
6. Family loans. This would be good if you have a family member who loves to extend a helping hand. However, it may not just be because of charity that a relative offers to lend you money. A 7% return is always better than the 2% they get from the bank.
7. VA loans. If you were once a member of the armed services and you have a fairly decent job and would be able to save around three paychecks, a VA loan might just be able to help you get your new home.
8. FHA loans. Although the FHA does not directly loan you the money, they are able to make sure that the bank would The Farm Home Administration doesn’t actually loan the money, but guarantees your loan for the bank, so they can loan up to 97% of the purchase price, depending on the particular FHA program.
9. No-doc loans. The low-doc and the no-doc loans are back. They offer loans that do not or ask for only a few requirements. These are available from banks online. Those with bad credit or are unemployed but have some 20% for the downpayment can easily use this option.
10. Credit cards. Although this is a risky choice, using a credit card with a low interest may be able to settle your downpayment. This would especially be good if you are expecting money (like from a tax refund) to pay it off shortly after charging it. Generally, banks do not permit this, but you have the option of combining it with seller financing.
There are a lot more ways to finance your home. You may want to do some research or better yet, consult with your agent. Sooner or later, you would be able to discern which option would be best for you and your financial status.
Filed under Finance : Comments (0) : Mar 22nd, 2008