6 Creative Ways to Afford a Home
If your income and savings are making homebuying
a challenge, consider these options.
1. Investigate local, state, and national
downpayment assistance programs. These programs
give loans or grants to cover all or part of
your required downpayment. National programs
include the Nehemiah program (http://www.getdownpayment.com)
and the American Dream Downpayment Fund from
the U.S. Department of Housing and Urban Development
(http://www.hud.gov).
2. Get the seller to provide financing. In
some cases, sellers may be willing to finance
all or part of the purchase price of the home
and let you repay them gradually, just as you
do a mortgage.
3. Consider a shared-appreciation, or shared
equity, arrangement. Under this arrangement,
your family, friends, or even a third-party
may buy a portion of the home and thus share
in any appreciation when the home is sold. The
owner/occupant usually pays the mortgage, property
taxes, and all maintenance costs, but all investors’
names are usually on the mortgage. There are
companies that can help you find such an investor
if your family can’t participate.
4. Get help from your family. Perhaps a family
member will loan you money for the downpayment
and/or act as a cosigner for the mortgage. Lenders
often like to have a cosigner if you have little
credit history
5. Lease with the option to buy. Renting the
home for a year or more will give you the chance
to save more toward your downpayment. And in
many cases, owners will apply some of the rental
amount toward the purchase price. You usually
have to pay a small, nonrefundable option fee
to the owner.
6. See if you can qualify for a short-term
second mortgage to give you the money to make
a higher downpayment. This may be possible if
you have a good income and little other debt.
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