Thinking ‘Outside the Box’ to Buy a Home
Are you in the market to buy but limited by your finances? Well take some comfort knowing you're not alone. The 2009 recession left a lasting mark on the labor markets as well as most people’s bank accounts. Though fortunately today's housing market is considered a "buyers market” which means that certain factors (supply versus demand, home prices, inventory levels and days on markets) give buyers more leverage at the negotiating tables.
Sellers are considering creative offers
Many sellers are more willing than ever to take a more non-traditional route with a sale. They are ready to move on and eager to find a buyer. Sometimes it’s necessary to think outside the box in order to get the results we want. And right now is a great time to buy! Interest rates remain remarkably low and affordability is at a generational high; however, if your credit is less than stellar or you have limited savings, it could be a bit challenging. So it’s time to get creative and think outside the box!
Use a non-traditional lender
First, talk to your family to see if there’s someone willing to help you. It could come in the form of a down payment gift, a friendly loan for closing costs, or a more financially-stable relative who is willing to be your "lender." Family loans almost always have exceptionally low or non-existent interest rates. Your family knows you better than anyone. Your credit report may indicate you're high risk but if you’re a trustworthy person by nature who, at one time, experienced some financial hardship, then maybe there's a relative open to helping you.
A family member might be willing to participate in a “shared equity” or "shared appreciation" set up. This means that he or she is part owner of the property, and the person’s name will be on the mortgage. Then when the time comes to sell or tap into that equity, it will be a payday for them. So for them, it's an investment opportunity.
Find out about local downpayment programs
Check out what kind of down payment assistance programs might be available in your city, state, or even on a national level. Look online and ask a local realtor for tips on where to look and who to call. Take a look at the HUD site for programs and tips available through the federal government. Finally, talk to sellers about their thoughts on non-traditional type sales. This could come in the form of a lease with the option to buy.
Essentially this means that you lease a home and pay a specific dollar amount each month to the seller who for that period of time becomes your landlord. You then get some breathing room to save up money for the down payment. You could arrange to buy the home several years down the road or in a year’s time.
If the seller is generous, they could even offer to put your monthly "rent" payment towards the final amount of the home. If they're not interested in this option, see if they would be willing to serve as the lender for the home, which means that you would be making payments to the seller instead of a bank. Though this generally only works if the seller is in a secure-enough financial position to be able to wait to get their money.
So if you’re facing some hurdles in becoming a homeowner, there are definitely options available, you just need to research how to get around them by thinking outside the box!