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Home Purchase Options You Might Not Know About

Home Purchase Options You Might Not Know About

When most people think of buying a home, their minds immediately go to the standard process of saving for a down payment and getting a traditional mortgage. But there are other options available that can help you reach the goal of homeownership. Some can make saving the down payment a non-issue while others help current homeowners looking to move from their current home to a new one.

So, before you begin walking the most traveled path for purchasing a home, see if these options will help you get there faster.

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Ways to Skip Saving for a Down Payment

One of the biggest hurdles between most people and homeownership is the down payment. Most conventional mortgages require borrowers to put down 20 percent of the sale price of the home. And that is no small feat.

However, certain loans require smaller down payments. For example, FHA and VA loans often have less stringent requirements, as well as USDA loans. Specialty loans on Fannie Mae and Freddie Mac foreclosures are also available without a full 20 percent down payment. The exact amount required can vary over times, so it is important to see what options are available at the precise time you are looking to buy.

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Another Option for Down Payments is Gifts. Certain family members can provide funds for use towards the down payment without some of the time-based eligibility restrictions that can affect the buyers own savings. However, only certain familial relationships qualify, and the person providing the gift must legally attest to the fact that the money is a gift and not a loan.

Those within certain income limits may qualify for down payment assistance through local government organizations. Certain states, counties, and other municipalities provide funds for down payments to individuals who meet specific criteria. Often, only those buying a primary residence can apply, and a minimum stay in the property may be required before a sale. Failing to meet the terms often means the funds must be paid back, so it is important to understand the details prior to accepting assistance.

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Bridging the Gap When Selling One Home to Buy Another

Another situation that complicates the home buying process is when the borrower is currently paying a mortgage on a primary residence they intend to sell. Trying to coordinate the timing of a sale and purchase isn’t easy, and juggling multiple mortgages only makes things more complex.

It is common for current homeowners to have their “down payment” tied up as equity in their current property. That means they have an appropriate amount of assets, but it might not be accessible as cash. Additionally, certain home loans have restrictions regarding whether they have to be associated with primary residences. Additionally, some banks may be hesitant to offer a favorable mortgage rate on the new loan if the amount remaining on the current mortgage is high.

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In some cases, the best course of action is to consider bridging loans for the house purchase. What these loans provide is a short-term financing solution to help you transition from one mortgaged property to the next.They can be used to tap your current properties equity to obtain a down payment or can pay the current mortgage off making it easier to obtain one on the new property. Then, once the current property sells, the borrower simply pays off the bridging loan and continues with their new mortgage.

Otherwise, the best alternative is often to wait until your current home sells before jumping into the market. In those cases, you may need a temporary housing solution for the interim.

The Traditional Method

While some of these alternatives can make buying a home easier, there is also nothing wrong with going the traditional route. In fact, it can be the smartest move financially in most cases. So, if you aren’t sure about any of these other methods, or don’t have access to them, go ahead and save the 20 percent first. In the end, there is no such thing as having too much savings for a down payment.

Featured photo credit: http://goodmanrealtyaz.com/ via goodmanrealtyaz.com

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Shelly Green

Entrepreneur writer and a blogger

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Last Updated on March 24, 2021

8 Smart Home Gadgets You Need in Your House

8 Smart Home Gadgets You Need in Your House

We’ve all done it. We’ve gone out and bought useless gadgets that we don’t really need, just because they seemed really cool at the time. Then, we are stuck with a bunch of junk, and end up tossing it or trying to sell it on Ebay.

On the other hand, there are some pretty awesome tech inventions that are actually useful. For instance, many of the latest home gadgets do some of your work for you, from adjusting the home thermostat to locking your front door. And, if used as designed, these tools should really help to make your life a lot easier—and that’s not just a claim from some infomercial trying to sell you yet another useless gadget.

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Take a look at some of the most popular “smart gadgets” on the market:

1. Smart Door Locks

A smart lock lets you lock and unlock your doors by using your smartphone, a special key fob, or biometrics. These locks are keyless, and much more difficult for intruders to break into, making your home a lot safer. You can even use a special app to let people into your home if you are not there to greet them.

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2. Smart Kitchen Tools

Wouldn’t you just love to have a pot of coffee waiting for you when you get home from work? What about a “smart pan” that tells you exactly when you need to flip that omelet? From meat thermometers to kitchen scales, you’ll find a variety of “smart” gadgets designed to make culinary geeks salivate.

3. Mini Home Speaker Play:1

If you love big sound, but hate how much space big speakers take up, and if you want a stereo system that is no bigger than your fist, check out the Play:1 mini speaker. All you have to do is plug it in, connect, and then you can stream without worrying about any interruptions or interface. You can even add onto it, and have different music playing in different rooms.

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4. Wi-Fi Security Cameras

These are the latest in home security, and they connect to the Wi-Fi in your home. You can use your mobile devices to monitor what is going on in your home at all times, no matter where you are. Options include motion sensors, two-way audio, and different recording options.

5. Nest Thermostat

This is a thermostat that lives with you. It can sense seasonal changes, temperature changes, etc., and it will adjust itself automatically. You will never have to fiddle with a thermostat dial or keypad again, because this one basically does all of the work for you. It can also help you to save as much as 12% on heating bills, and 15% on cooling bills.

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6. Smart Lighting

Control your home lighting from your remote device. This is great if you are out and want to make sure that there are some lights on. It is designed to be energy efficient, so it will pay for itself over time because you won’t have to spend so much on your monthly energy bills.

7. Google Chromecast Ultra

Whether you love movies, television shows, music, etc., you can stream it all using Google Chromecast Ultra. Stream all of the entertainment you love in up to 4K UHD and HDR, for just $69 monthly.

8. Canary

This home security system will automatically contact emergency services when they are needed. This system offers both video and audio surveillance, so there will be evidence if there are any break-ins on your property. You can also use it to check up on what’s happening at home when you are not there, including to make sure the kids are doing their homework.

Featured photo credit: Karolina via kaboompics.com

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