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 understand their options and possibilities so they can proceed wisely! Although most consider owning a home of their own is a significant component of the so-called American Dream, it is essential to proceed in an informed manner to ensure the best- possible results! With that in mind, this article will attempt to consider briefly, examine, review, and discuss five potential financing options, which are often available, for making this purchase, and some of the factors and relevant considerations.
1. Friends and family:
Traditionally, many first-time homeowners find it extremely challenging to combine the down-payment and closing costs involved, as well as qualify for a mortgage with the most favorable terms! Many of us have been fortunate enough to have parents, who can, and are willing, help out financially, etc.! Some have influential, close friends! Before purchasing, it is wise to consider your circumstances, options, and opportunities realistically and thoroughly!
2. Owner – financing:
In specific 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 usually refer to something as a Conventional Mortgage when it is the so-called standard for the industry. This has generally meant that 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). Usually, lending institutions have specific standards regarding the borrowers, credit history/ rating, income – – debt ratio, etc. So, one should know and understand these from the start!
4. Other types of mortgages:
Some choose a different 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 variety of owner-financing, for a – part, with a regular mortgage, for the rest. This is often used when one does not have the necessary down – payment, 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!