Whether, one is purchasing, his first home, or has done so before, if it is for his primary residence, or investment purposes, or, for a second/ vacation – home, one reality is the common bond! In order to buy real estate, you have to come up, with the necessary funds, either through, one way, or a combination of approaches, in order, to close – the – deal. There are several options, and, some depend, on your personal credit, the type of property, etc, so, with that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 ways, to fund ant real estate purchase.
1. Personal funds: Some people, either, have accumulated funds, by selling another house, investments, personal business earnings, etc, and, use these, to pay cash for the property, they plan, to purchase. Some home sellers seek these times of buyers, because, they often, proceed, with fewer hassles, and other delays, which might occur, when there is a mortgage, involved.
2. Family and friends: Often, especially, for first – time homeowners, financing a house, and, thus, owning a home, of one’s own, is challenging, because most mortgages require a 20% down – payment, and, with the ever – increasing price of real estate, in many regions, is difficult! Therefore, many seek, alternative approaches. One, which is usually, the first, for many, is asking for monies, from one’s family, and/ or, friends. Often, a young couple, turns to either, one, or both sets of parents, for help. At other times, we see close friends, willing, to assist, in creating, creative financing.
3. Seller – financed: Although it happens more often, in commercial property, or in sales of professional practices (medical, dental, legal), we often witness seller – financing, used, to make a deal, work! Simply, stated, this is when, the existing owner, agrees to, hold the paper, in order to create a deal, and help it, get done!
4. Conventional mortgage: A conventional mortgage is acquired, usually, from, either, a mortgage banker, or broker. This is the most common/ typical way, people buy their personal homes. Usually, someone puts down a down – payment, and finances the balance. A conventional loan is usually, for a term, ranging from about 15, to 40 years, and the individual pays a fixed rate, for the duration.
5. Alternative mortgages, including, variable rate, and/ or, lower amount of money, down: Alternative mortgages, function, much like a conventional one, except, either, the interest rate, is variable (fixed for short period, and adjusts), or the lending institution permits a lower down – payment.
A wise home buyer explores, learns about, and knows, his financing options/ choices, and proceeds accordingly. Will you try to be a better informed consumer?