Financing Options to Purchase a Home
When you're starting out and are looking to purchase your first home sometimes it is difficult because your income may not be adequate and maybe your savings are struggling. With a little creative thinking there may be other financial options.
One of the first things you can do if you find a home you like is to approach the seller to see if owner financing is available. The seller may have a situation where they are able to finance all or a portion of the loan themselves. You make your payments directly to them just as you would to a bank. You have your home and they have an investment.
Your family is always an option, well maybe not always. Maybe a family member can loan you a downpayment or if your credit is an issue the banks might welcome a family member as a co-signer.
The Nehemiah program (http://www.getdownpayment.com) and the American Dream Downpayment Fund (http://wwww.hud.gov) are two programs that give grants or loans to help you with your downpayment. Check them out as well as other assistance programs run by your local, state and federal governments.
If you find a seller that is not in a big hurry to sell you may be able to talk them into a lease with an option to buy contract. In this case, you would pay an option fee to the seller that will give you an option to purchase the home at some future date and in the meantime you would pay rent with usually a small portion going towards a future downpayment.
A more involved option would be a shared arrangement. In this case, you get several investors together, they may be family or an unknown investor. Everyone puts in some money to raise the downpayment. All parties are on the mortgage. You pay the mortgage payment and take care of the home as you normally would. The difference is that the investors that helped you with your downpayment will now share in the appreciation or equity of the home. You need to be careful that the contract is written property to protect yourself.
And a final suggestion if you have good credit and good income but little savings for a downpayment. Sometimes, and this is becoming more popular, the lender will establish a second mortgage on a short term basis to provide you the money for a downpayment. This is a separate loan, but attached to the home.
RUTH BETHEM, ABR, CRS, GRI, Realtor®