One of the challenges, involved, with buying a home, is, coming up with the necessary funds, required, in order to achieve this objective. While, this is often challenging, to anyone, it is, even, more so, for first – time buyers, because they don’t own, the previous equity, that many, who relocate have (because they sold their previous house). Most of us, focus on having the downpayment, and qualifying for the best possible, mortgage loan. However, we rarely discuss, nor do most people, consider, the variety of financing possibilities, available. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 financing possibilities, for buying/ purchasing a home, of their own.
1. Family and friends: One of the most utilized resources, for being able to fund, purchasing a house, is speaking to one’s closest friends, and families. Many people, have done so, mostly, accepting the generosity of their parents. Since there are so many costs involved, few, have the ready – funds, needed, including all the expenses, needed for the closing, and mortgage requirements/ downpayment!
2. Bank: One of the obvious approaches, and choices, is to discuss, your needs, with your personal banker, which you may have developed a relationship with! However, one must try, to avoid the temptation, to merely, opt for the path, of least resistance, and have your bank, compete with other sources, for your business! Compare rates, terms, and other pertinent information, before choosing, how to proceed.
3. Mortgage banker/ broker: What’s the difference between, a mortgage banker, and mortgage broker? While the former, finances the transaction, with their own funds, the latter, places the business, with another lender (for a fee). In either case, you should always, get the entire, bigger picture, and compare, what each, and every option, offers!
4. Other loans: Some use a combination of vehicles, and sources, to secure the necessary financing/ funds. For some, more than one vehicle is needed, in order to secure the main mortgage/ loan, as well as the needed funds, to qualify, and create the needed downpayment. Sometimes, it’s challenging, because, especially, first – time buyers, are unable to accumulate a sufficient amount, needed, immediately. Remember, most conventional mortgages, require 20% down, and, with today’s home prices, the combination of the other 20%, as well as other closing costs, becomes a severe obstacle!
5. Owner financing: When a qualified buyer, who is capable of securing a loan, for most of the costs, has difficulties, with the immediate funds, some owners offer what is referred to as owner financing, which means, holding a second – loan, in order to secure a deal. There may be times, under certain circumstances, a particular owner, might be willing to offer the entire financing, needed.
Be prepared, for the financial necessities of buying a home, of your own. The more one knows, and prepares, the easier the task!