The dream and the ambition to own your home, often surpasses most other life goals a human being might have. However, there are many roadblocks on the way to home ownership chief amongst them being low credit scores.
Other times it is often a lack of a down payment. If you are caught up in this quagmire, there are alternative home credit lines besides traditional mortgage loans that can help you purchase your new house with much ease. Some of them include;
An online mortgage lender
Buying a house, especially the first time around can be an unnerving venture. The young especially are leaving school shackled with hefty student loans making it much more challenging to pursue traditional financing. Your first visit to your loan officer might be downright intimidating if you have no idea how far your finance can be stretched to afford a new home.
But as the growth of online mortgage increase, more people who are in not in a position to find mortgage from traditional sources, are finding their way out of this quagmire. Anyone now can compare the terms and rates of different mortgage lenders to find one that is more compatible with their needs. As more and more traditional lenders take up more space on the internet, it is becoming much easier to crunch your numbers in the privacy of your own house.
Before going house shopping, it is essential to know your numbers. Have a minimum of three quotes from three different lenders to help you zone in on what is affordable. After that approach an online lender of choice who will help you out with your home’s financing, even in situations where you might have a low income, credit problems or are in self-employment.
Online home credit lenders are more accommodating for anyone with a low credit score or other borrowers that traditional mortgage lenders view as a source of risk. These lenders will give you options and affordable interest charges. However, if you have credit problems, these alternative sources of home financing will provide you with higher rates of interest.
Go to hard money lenders
Hard money? Really? Probably the last thing you want to get involved in if you are in a difficult financial situation is a shady, shadowy lender located down a dirty alley. This is probably someone who will make you sleep with the proverbial fishes at a whim. It is an open secret that traditionally there have been many bad apples when it comes to hard money lenders.
These sky-high interest rate lenders didn’t do much good for the industry because they were mostly predatory; ‘loaning to own’ property through risky loans that expedite foreclosure. Thank you progress, the era of these mafia-like lenders has passed and what’s left is stigma from the past and a fantastic opportunity for a short-term loan.
Through hard money borrowing, you can partake of the housing market if you cannot pursue traditional home loans. This line of financing is given by private investors or funded by a group of investors who will, for example, use your property as collateral.
It is an alternative source of a fast loan, and its terms are usually one year, but it can be extended to two or five-year terms. It is repaid back in a monthly fashion of either interest only or principal and interest and a balloon payment as the loan term ends.
These lenders will give you an amount based on your property’s value. And you do not need to have real estate to acquire hard money funds. You could use the house you intend to buy with the funds borrowed as collateral. If you have a property in your pocket already, well and good, you can easily use that too.
If the value of your property is fantastic, you will get excellent rates from a hard money lender. These quick approval lenders which can be found right here are less interested in your credit health and more interested in property values. However, your overall credit health will still impact your rates so it does help to keep it as clean as you possibly can.
If for instance, traditional lenders have turned their back on you due to a short sale or a foreclosure, hard money lenders will welcome you with open arms if you have equity in property form to show them.
Rent to own
In the 80s and 90s, it was trendy for home buyers to test drive home before purchase. The trend lured in hordes of prospective home buyers, endearing itself to those with low credit scores or without down payments from traditional brick and mortal mortgage lenders.
What’s more? The process gave those wishing for a house but unsure if they need to purchase a chance to dip their toes into the home-ownership pool and decide if they are for the plunge or not. In the earthly 2000s, the system began to fall apart as such prospects became harder to find.
Now as banks tighten their lending processes the rent to own system is back with a bang. Rent to own or lease options homes helps you to fully purchase your house at a later date after the signing of a contract between you and the property owner. The process may take anything from two to five years, which when complete you the renter, will be allowed to purchase the home you have been renting for an agreed amount.
The signed contract ensures that the property’s seller will not place your rented home back on the market during the time stipulated by the agreement. Rent to own properties have unique advantages to them. First of all, they are much easier to sell off in a slow market. Since they are classified as a rental property, they will give tax and income deductions too.
With them, you can rebuild a credit score that’s in the dumps without wasting away money renting the property you cannot buy in the end. The option deposit coupled with the rent credits will, in the end, make up for a tidy sum that can be used as part of the home’s purchase costs. As per a survey by the Federal Trade Commission, 2.3% of American households have been part of the rent to own process of home-ownership, and 4.9% of this segment has done so in the last decade. The statistics also show that over 58% of these renters do end up purchasing their homes at the contract’s maturity.
VA loans
The VA loan is a 100% financed, no money down home-ownership program guaranteed by the Department for Veteran Affairs for the U.S military and their spouses. Any of its members, honorably discharged or on active duty can partake of the VA loan. If you or your spouse has spent a minimum of six years serving in the National Guard or Reserves, you are also qualified for the loan. A VA loan can give you up to $726,525 in areas like Honolulu, California, San Francisco and Hawaii where home purchase are high but are based for the military.
USDA and FHA loans
The USDA loan once known as Section 502 mortgage or Rural Housing Loan is a 100% mortgage available to both rural and suburban areas. The investment is directed to moderate and low-income households in need of a home purchasing loan.
The FHA is a loan insurer, and it ensures loans for people with low FICO scores as long as you have a good explanation (if there is one) for your low points. The FHA is very liberal in its approach to home financing, and it can allow a down payment of 3.5%.
Conclusion
There are few things as comforting as leaving a hard day’s work and finding comfort in your own home. Children and adults alike are better off both socially and emotionally in the stability of a home. Now you too can own a piece of this comfort from these sources perchance the traditional lenders have turned their backs on you.
