HOW DO I FINANCE MY HOME?

 

There are several ways you can finance your home

It will depend upon your credit worthiness. 

 

As many of you know, we are in the midst of changes within the banking arena.  The media is telling us that banks are not making loans.  That is NOT true!  Loans are still being made, although lending guidelines have gone backwards about 20 years.  This is not a bad thing! In order for banks for avoid short sales and foreclosures, they needed to tighten up the rules for lending.  Frankly, the borrowers need to become more conservative with their debt so when unexpected issues arise, they don't get into trouble.  Borrowers also need to stop using their home equity like a credit card!  Sorry to sound so blunt, but with the financial issues we are experiencing, we need to be more responsible with our homes!

 

Find a reputable and qualified lender.  If you are shopping rates make sure to get a copy of the Good Faith Estimate so you can compare apples to apples.  Don't go with someone just because they say they can provide you the best rate. There's more to it than that.  As a Realtor with previous lending experience, I'm quite picky about the lenders I work with.  See the list at the left for lenders who are on my "A" list.

 

If your credit falls within the acceptable guidelines for a conventional mortgage you may finance through a bank, mortgage company or mortgage broker.  If you are self-employed or have credit challenges you may want to try to use creative financing.  What are the differences?

 

Conventional Mortgages:

  • Ask a qualified lender for the best type of loan for your situation

Government Backed Loans:

  • FHA
  • VA

 

Creative Financing:

  • Land Contract:
  • Lease Purchase: This is a lease with a purchase contract attached to it.  The lease will be for a set amount of time.  When the lease is up you are expected to have a mortgage and close on the property.
  • Lease Option:  This is similar to the Lease-Purchase with the exception that you have the "Option" to purchase after a set amount of time.  At the start of the lease you will provide "Option Funds" to the seller for having the option to purchase the property at the end of the lease.  Option money typically is non-refundable.
  • Seller Carry-Back:  This is where the seller may create a secondary loan on the property for you.  You will pay the seller back for the second mortgage and the bank for the first.