Do you think that begging the bank to approve a mortgage loan is the only way to buy a home? Think again.
There are several other ways to buy a property that you may not know about. For instance, there are home auctions, owner financing arrangements, and more.
So, if you’re having trouble getting a mortgage loan approved, you don’t have to give up on your dream of owning a home. Instead, read this list and try one or more of these alternative home financing options.
1. Owner Financing
Owner financing is a fancy way of saying that you negotiate the terms of the purchase directly with the owner. Normally, home sales are facilitated by a third-party mediator, such as a real estate agent.
But through owner financing, there’s no third-party waiting for their cut. It’s more-or-less a loan arrangement between you and the seller.
When you think about it, it’s very much like a personal loan. As such, you’d need to find a seller willing to put themselves at risk in this way for this to be an option.
Besides the general terms and conditions you’d expect with a personal loan, the seller may have other conditions concerning the property, such as repairs. For instance, if repairs are required before the building is habitable, the seller may require you to make the repairs.
2. House Auctions
House auctions are a common way that banks sell foreclosed homes. The competition drives up the price while selling the home fast. Still, you might find a good deal since the price you accept is up to you.
Generally, you won’t have the option of taking out a mortgage loan to pay for auction properties. That is, you’ll need to have the cash on hand. So, if you have a bunch of equity leftover from selling your own home, this might be a good option.
Also, know that auction homes often come as-is. Thus, you might have to pay upfront for repairs that the struggling owners before you couldn’t afford.
3. Private Loans
This is another decent option if you have a bunch of extra money lying around, like leftover equity. In this case, you might be able to take out a private loan to cover the remaining cost of the house.
Keep in mind, though, that these loans tend to have higher interest than regular mortgages. But you might consider them if a mortgage isn’t an option.
4. Rent to Own
Our last alternative home buying method is a rent-to-own arrangement. This is ideal for those buyers who can’t afford a downpayment.
It’s also ideal for the seller who needs to get their home sold immediately. For instance, sellers will often consider this option to avoid foreclosure.
This way, you can afford to buy the home now, while you save up for the downpayment. And the seller gets more time to sell their home. Everyone wins!
Try These Alternative Methods to Buy a Property
If taking out a mortgage loan isn’t working out, you know what to do. Try one of these alternative methods to buy a property.
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