Creative financing for homes
If you find that you cannot pay cash and you cannot borrow money from a traditional mortgage lender, then the best thing that you could do is to explore certain creative financing methods that exist in the market today. Home financing has always been the most searched financing option world wide and it comes as no surprise that many lenders and agents are marketing some unique creative financing methods to help you buy that dream home. Some common and most often used methods are listed below:
Lease purchase is an arrangement whereby the seller allows a buyer to contract to buy a home, and move in the house prior to closing. A lease agreement provides for the terms of the occupancy prior to closing, and the closing could occur within whatever contractually specified period of time the buyer and seller have agreed upon. Another arrangement is the Purchase Money Mortgage. The term purchase money mortgage is used to describe seller financing. This method involves the seller himself financing the purchase of his home. Seller financing is one of the least understood and yet best ways to get marginal buyers into homes. The biggest advantage is for the seller as he gets a buyer to buy his home, even if he has problems in arranging for funds. A good real estate agent can negotiate terms and make sure that both buyer as well as the seller is happy with the outcome.
Joint ownership of a property with a friend or relative is another option that can be explored. This involves a good deal of understanding and trust between both parties. Here, the documentation has to be done in a perfect manner so that neither of the two parties can betray the other and make higher profit margins. Rent in common is another way of ensuring that you are able to buy that home that you cannot afford. In such cases, the purchase is done as a joint ownership and a third party is included as a rental partner. This ensures that the two individuals involved in the partnership can live in the house, pay half of the mortgage amount and divide the rental income that they get from the third individual, who is the tenant. Some agents also advise to take additional loans to take care of the down payment, apart from the mortgage finance which normally takes care of at least 80% of the value of the house. Though this is a very convenient way to secure a home, this has disadvantages as you end up being saddled with too many loans and if unfortunately, your income reduces or you lose your job, you can be in dire straits, as you shall find yourself unable to pay the installments.
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