The typical path to home ownership with a traditional loan may seem daunting. However, there are innovative alternatives that cater to a diverse range of financial situations, offering a world of possibilities for prospective homebuyers.
The Wall Street Journal suggests using investments as collateral, which involves borrowing against your own securities, eliminating the need for application fees, closing costs and financial documentation.
Cross-collateralization means that multiple assets are combined and used as security for a loan, such as another property you own free and clear along with the home you’re looking to buy. While you’ll be mortgaging both properties at a rate similar to a standard mortgage, this option allows 100 percent financing on a new purchase.
Some mortgages as “assumable” – that is, the buyer can purchase a home by taking over the seller’s mortgage, allowing for the buyer to keep the previous interest rate. Loans that are insured by the Federal Housing Administration or backed by the Department of Veterans Affairs could be assumable if specific requirements are met, so talk to your agent and lender to see if your purchase might qualify. Read more about assumable loans HERE.
No Down Payment / Low Down Payment
Speak with your lender, as some home buyers can qualify for no- or low-down payment loans. While some of these have strict requirements, it’s worth the conversation to see if you might be a fit.
And, if you’re still not finding a mortgage that works for you, look at new construction, as some builders are able to offer lower rates by acting as the lender.
The key lies in initiating a conversation with your lender to explore these alternatives and discover what might be the best fit for you. Don’t be deterred from buying a home until you turn over every stone, as the path to home ownership might be easier than you think!