10 Important Tips When It Comes To Real Estate Financing

by Robin Rohrs on February 22, 2012

Do you remember when real estate financing meant you saved up enough to put 20% down on a house, and then you got a mortgage loan for the other 80%? You can still do that now although there are a lot more options to choose from. Keep reading to learn a few of them.

What are gifting programs. In some parts of the country, builders fund foundations that give you a portion of the downpayment, so you can get into a home with as little as 3% downpayment from your own pocket. FHA and other lenders have so far approved of or allowed this.

FHA loans. The Farm Home Administration doesn’t actually loan the money, but guarantees your loan for the bank, so they can loan up to 97% of the purchase price, depending on the particular FHA program.

All about VA loans. Having been in the armed services, having a decent job, and can save two or three paychecks would mean that you can probably get a home with a VA loan. All about land contract. This is also called “contract for sale” and other names though it would depend on the part of the country you are in and this just means that you make payments to the seller instead of a bank. It is up to you and them to negotiate not just the down payment amount but also the interest rate and the term of the loan.

Seller-carried second mortgages. There are banks that will let you to have as little as 5% into a home purchase, but will then only loan you 80%. Taking payments on a second mortgage from you for the other 15% is what the seller can do.

State housing programs. Something that nearly all states have is some sort of financing help in the form of a loan-guarantee program or outright loans for low-income buyers.

What are family loans? It may not be out of charity that a brother or a friend lends you the money to buy a home. Looking awfully good if ever their money is just sitting in the bank at 2% would be a 7% return.

What are manufacturer loans? What some manufactured-home companies are doing is arranging financing with 5% or less down for their buyers. It is important that they feel their money is secure since a good modular on a piece of property is nothing like a mobile home on a rental lot.

Credit cards. If you have a low-interest credit card, then even if this is a risky one you can still use it to come up with the down payment especially if you can pay it off soon with a coming tax refund, for instance. You can combine this with seller financing even if banks won’t generally allow this.

Are there more ways to approach real estate financing? The answer is yes. The reason for this is to get you thinking.

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