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Financing Options for a Home Purchase

While buying a new home is an exciting venture, it also means spending money for the down payment, closing costs, and moving. With good planning, people can have all the money needed so when it comes time to make an offer while experiencing less stress. In addition to coming up with money simply by saving for a home purchase, people have alternative financing options that would help with the down payment, closing costs, and moving expenses.

By thinking outside the box, being creative and looking at all options, homebuyers discover they have some unconventional and alternative financing options. With this, the buyer would be looking at options for raising cash in ways that are commonly used by investors. For instance, one option for a home purchase known as “hard or private money” is an option usually used to rehabilitation property acquisitions, which means the interest rate is high, the loan a short-term balloon note less than one year, and it has a low loan-to-value ratio.

However, when considering alternative financing for the various expenses associated with a home purchase, people might want to consider private money. In this case, rather than raising the money, the individual would borrow funds from a private party. The lender would offer funding using his or her private bank account, a 401K retirement fund, or some other means. Unlike traditional mortgage loans, financing of this kind may not even involve the buyer’s credit history or current financial standing to be checked. Instead, qualifying, as well as the terms of the loan would depend on the way it was set up between the buyer and the lender.

Another alternative for financing a home purchase would involve the buyer taking over existing payments after gaining access to the home. In this situation, the homebuyer would take the deed to the property while making all the payments. However, the actual mortgage loan would remain in the lender’s name. With this, the buyer would be protected with a safe and highly effective option but if the loan were defaulted on, the lender would have recourse.

Seller financing is yet another possibility for alternative financing. Simply put, the person selling the home would carry the mortgage. Now, most sellers, especially in today’s market, are in a position of funding only a portion of the money needed but even this would be highly beneficial for people wanting to make a home purchase. Additionally, it might be possible for the buyer to qualify for a business line of credit, which could be used to purchase the home. For this, the buyer would need to talk to an experienced and reputable lender so the specific details of the situation could be discussed and analyzed.

The truth is that financing needed for a home purchase comes in a variety of shapes and styles, each unique. Even the expense of moving could be handled in a more cost-efficient manner if the buyer were to make certain choices such as:

  • Reducing the amount of items being moved by having a garage sale, auction, or donating unwanted items to charity
  • Hiring a moving company that charges by the load rather than an hourly rate in that movers working on an hourly rate are often unmotivated to work quickly
  • Obtaining quotes for belongings to go on a truck along with other people’s property opposed to renting an entire truck, meaning moving costs would be shared
  • Waiting to move off-season when moving companies are less busy, resulting in tremendous savings
  • Asking the moving company for a discount since often, negotiations would result in a lower price
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