Mr Palm Bay Realty

Alternatives to a Traditional Loan for Buying A Home

by Marty Piatkowski 11/17/2019

The decision to buy a house is probably the best decision you would ever make. Deciding is the easy part; coming up with the capital to finance the dream is the hard part. Getting a home of your own has its perks, but it can be a daunting process to acquire.

Usually, prospective homeowners seek mortgage loans when they need to get a house they can afford. The traditional mortgage has its terms and conditions for granting out loans. You must satisfy the terms and conditions before such loans become available. 

So, what happens if you do not qualify for a mortgage payment? Does this mean your ‘American Dream’ of owning a home would not see the light of day? There are other channels prospective homeowners can seek loans from aside the traditional mortgage. They include:

Lease-to-own

Lease-to-own is an agreement between the seller and the buyer. The seller rents the house to the buyer temporarily if the buyer can come up with enough money as a down payment. The rent installment paid, out of which a certain amount goes into an escrow account as money to use in securing the home. The contract is usually between a year after which the buyer pays for the balance of the property or packs out and leave. 

Borrow from Your Retirement Account

Borrowing from your retirement account is like borrowing from yourself, but this should only be short term. You will pay a penalty fee of 10% if you are not up to the age of 60 years for taking out money from your retirement account - and you would pay taxes on the amount borrowed. If you lose your job during the process, you must pay back the money borrowed within 60 days. 

Borrow from Your Insurance Policy

What’s the harm in borrowing from your insurance policy especially if your insurance policy allows you to take a loan against your principal? You don’t have to return the money, but you would get less than the amount you or your heir were supposed to get paid when the policy matures. You can apply for the loan through your insurer directly and bear in mind that the rates vary. 

Save Enough for A Down Payment

This method seems like the most convenient, but it requires you to exercise patience. Most lenders now do not need 20% as a down payment anymore but if you can’t come up with enough money as a down payment–save enough until you qualify for a traditional mortgage.

Get A Co-Signer

Getting a friend or a relative to co-sign with you is a great way to increase your chances of qualifying and to secure a loan, especially when they have a higher credit score than you.

Buying a home requires rigorous planning, and it is capital intensive. Weigh all your options before finally deciding. 

About the Author
Author

Marty Piatkowski

#LoveWhereYouLive

At Mr Palm bay Realty we are representing real estate needs in Palm Bay and the surrounding areas. We are "More Than Just Houses"! Every person who buys or sells real estate has a unique set of needs, desires, and personal things happening in their lives - we recognize these issues, and are interested, and compassionate to work with you in these matters. We treat people by following the Golden Rule. 

Sellers in the Palm Bay area have enough to worry about in readying their home for market and planning their move to a new home. We take over a huge number of tasks and details to make sure that your real estate property is properly evaluated, priced, marketed, negotiated and carried to closing. There are so many things to do to move to a successful sale, and we are here to advise, assist, and assure success!

Making the American Dream come true for buyers... We're not just experienced real estate professionals in the Palm Bay area real estate market, we're home buyers too. It takes more than a trained real estate agent to understand the needs and concerns of buyer clients. It takes someone who has been there, someone who has the same concerns when they’re home shopping.

We don’t want to minimize the technical aspects of the home buying process though. Every year it becomes more complex. Between government legislation, environmental laws, mortgage documentation requirements and the legal aspects of a home purchase, the home buyer must be on top of all aspects of the process, or be helped by a professional. Your Mr Palm Bay Realty professionals are here to assist buyers in the Palm Bay area real estate markets, and we're really good at our job!