Since, for most, the value of their home, is, one of, if not, their single – biggest financial/ economic asset, wouldn’t it, make sense, for a potential homeowner, to know, and understand, as much as possible, before buying any house? After, over 15 years, as a Real Estate Licensed Salesperson, in the State of New York, I try to counsel my clients, and customers, to know and understanding their options, and possibilities, so they can proceed, wisely! Although, most consider, owning a home, of their own, is a major component, of the so – called, American Dream, to ensure, the best – possible results, it is important to proceed, in an informed manner! With, that in mind, this article will attempt to briefly, consider, examine, review, and discuss, 5 potential, financing options, which are often, available, for making this purchase, and some of the factors and relevant considerations.
1. Friends and family: Traditionally, for – many, first – time homeowners, find it, extremely challenging, to put together, the combination of the down – payment, and closing costs, involved, as well as qualifying for a mortgage with the most – favorable terms! Many of us, have been fortunate, enough, to have parents, who are able to, and willing, to help out, financially, etc! Some have influential, close friends! Before purchasing, it is wise, to realistically, fully consider, your personal circumstance, and your options, and opportunities!
2. Owner – financing: In, certain real estate markets, especially, when it is, a Buyers (rather than a Seller) Market, some homeowners, are willing to finance, some, and/ or, all of the buyer’s financial needs, for financing. This may be, in addition to, more – conventional possibilities, or, the entire entity! Examine the terms, advantages, and disadvantages, before proceeding, and, realize, this option, is very rarely available, in times, like we are currently, experiencing, with record, activity, in the real estate/ housing markets!
3. Conventional mortgage: We normally, refer to something, as a Conventional Mortgage, when, it is the so – called, standard, for the industry. This has generally, meant, the buyer, puts – down, 20% down – payment, and finances, via a mortgage the balance, usually, for about 30 years (although the term may vary, either, up, or down). Lending institutions, normally, have specific standards, in terms of the borrowers, credit history/ rating, income – to – debt ratio, etc. One should know and understand these, from the start!
4. Other types of mortgages: Some choose, a different type of mortgage, for various reasons. These include: Variable mortgages; Balloon – type; shorter or longer – term ones, etc. It may, also, permit, a lower, or demand, a higher, down – payment, instead of the more – traditional, 20%!
5. Combinations: Some may, either, choose to, or need to, use some combination of methods. Often, for example, one uses, a combination of owner – financing, for – part, with a regular mortgage, for the rest. This, is, often, used, when one does not have the necessary down – payment, or other factors, etc!
If, you decide, to buy, a house, be prepared! Do your homework, and hire, the best real estate professional, to meet, and exceed your needs, and expectations!