Open These Tips on How To Buy A House Without Loan
The rising house prices in today’s market have turned the dream of property ownership into a hurdle for many families, along with the lack of sufficient cash to make the down payment on a new home (let’s just face it, many of us do not have a substantial savings cushion in our bank accounts). Cash is also needed to pay the high fees and closing costs that all go along with the house purchase and closing processes. Ouch!
Poor credit score? That's another hurdle. It is difficult – and very often impossible – to get approved for a home loan if your credit score is less than stellar.
But do not despair! Make your home ownership slice of the American Dream come true for you. Simply read on for some creative and unique ways you can make that new house all yours with little - to no - loans.
Purchase a Home Without a Loan? Yes! There Are Ways!
Like many millions of people in the United States, your savings account may be somewhat on the low side. Because of this savings insufficiency epidemic, recent polls reveal some very real concerns - the fact that families fear that their ability to own their own home will just never come to be!
But there are a variety of ways to buy a home, even with scrawny savings amounts, poor credit scores, past bankruptcies, and other money issues. These opportunities are available at both local and national levels. With a bit of research and some new know-how, the odds are more strongly in your favor!
House Hunting – Without a Loan
Should you currently be on the lookout for the purchase of a new home, keep in mind the largest initial expenses that typically need to be taken care of:
The down payment for the house
The home purchasing closing costs
Thanks to a number of Homebuyer Assistance Programs, both of these large costs can be eliminated through various and specialized ways to buy your new property without a loan.
Read about some homebuyer assistance program options below and discover some very helpful strategies you can happily, easily utilize for buying a home - without a pesky loan.
Look Closely Into a VA Loan and See If You Qualify
A VA loan is a type of mortgage loan that exists in our country; this type of loan is fully guaranteed by the United States Department of Veterans Affairs (VA).
If you happen to be an honorably discharged veteran, or a current member of the United States military, or the surviving spouse of a military member who died in the line of duty, you may very well qualify for a VA loan. What’s more, those folks who have served in the National Guard or the Reserves for at least 6 years are also VA loan eligible.
Because VA loans are supported by the U.S. Department of Veterans Affairs, this type of no-down-payment loan for a new home is guaranteed to have fewer and less strict requirements as well as lower rates all around for those who qualify and who meet VA loan eligibility for mortgages.
VA loan qualifications have amazing home purchase benefits that include:
- No down payment necessary (yes, you read that right!)
- Mortgage rates that are wonderfully below market
- The fact that a prior bankruptcy or any other types of credit issues do NOT equal an immediate disqualification
- A simple one-time fee that you can conveniently include within the loan amount itself
- The benefit of no maximum loan amounts (please note: this benefit is better for families with very good credit)
An FHA Loan Is a Popular Potential Home Buyer Program For Good Reason
Due to their numerous and various benefits, first-time homebuyers who are in need of help often turn to FHA loans.
With an FHA (Federal Housing Administration) loan, only FHA-approved lenders can issue the loan and your mortgage will be fully insured by the FHA. Developed for families with low to moderate incomes, FHA loans necessitate lower down payment minimums and those with lower credit scores are eligible (especially when compared to conventional loans!)
FHA loans allow families to borrow upwards of 96.5% of a home’s value – meaning a low down payment of 3.5%.
If a home buyer’s savings are still too lean for that 3.5% down payment, then the FHA lenders will allow new home buyers to use the funds from a family member’s financial gift or from a grant. Take note that when less than 10% of the amount of the down payment is made, those buying homes with an FHA loan will need to pay a mortgage insurance premium throughout the life of the loan.
The USDA Loan Option
Supported by the United States Department of Agriculture, a USDA loan – also known as a rural development loan – is another way for how to buy a house without a loan. The United States government supplies qualifying borrowers with USDA loans in order to spur the development of certain suburban and rural communities.
Qualifying borrowers can move ahead with the purchase of a home with a zero down payment while also enjoying lower loan fees. Some crucial criteria and important facts about a USDA loan include some of the following:
- The home you intend to purchase has to be located in a suburban or rural area; there are maps available that will show you eligible locations in your area
- The home you intend to purchase can’t be a working farm
- The house has to be for a single family (ie, multi family dwellings are not eligible)
- The property must be a one-unit home
- The house needs to be your primary residence once it is purchased
- Mortgage insurance is a requirement for a USDA loan
Getting Your Down Payment Gifted to You
Did you know that you can receive the down payment on a new home from money that has been gifted to you from a member of your family (such as a parent, or a grandparent, or an aunt or uncle, etc)? It's absolutely true!
Take note that if a down payment is going to be made with money that has been given to you as a gift, it is vitally important to follow the lender’s criteria and requirements regarding gifted money. You will need these essentials, in most “gifted down payment” cases:
A detailed “paper trail” relevant to the gifted money you possess – for example, who gave it to you, how it was given, why it was given, and the like
A legal note and / or paperwork stating that the gifted money does not have to be repaid is usually also a requirement
Going For a Purchase - Money Mortgage
In a nutshell, a purchase-money mortgage is a type of loan given to a potential home buyer by the actual seller, him or herself. It is a creative path for how to buy a house without a loan and it has benefits for both the buyer and the seller.
Also called "seller financing or owner financing," a purchase-money mortgage gives families without the funds for a down payment to get into a new home. This kind of mortgage is usually related to a home sale transaction where the buyer has a low credit score and / or no cash in hand and is unable to get approved for a loan by more traditional lenders.
Very unlike a traditional mortgage, the seller takes on the role of a typical bank by offering the seller the money to buy the home. After the very last payment or in the event of a refinance situation, only then does the buyer receive the deed from the seller.
When it comes to a purchase-money mortgage, some great aspects for the buyer include these positive details:
- Even though the buyer’s credit score is low to poor, the seller may still request the buyer’s credit report. However, in a purchase-mortgage situation, the seller’s credit expectations of the buyer are typically low and much more flexible than the requirements and expectations of conventional lenders
- Payments tend to be easier to negotiate. For example, if the seller asks for a down payment that is more money than the buyer has, the seller may allow the buyer to make lump-sum payments toward the down payment on a scheduled basis
- Closing costs are considerably lower than the same type of costs through a bank or other lender
- In a purchase-mortgage situation, the buyer does not need to wait for lender financing, nor hassle with the mountain of paperwork that goes along with the lender. That means the buyer can close on the house more quickly and take possession of the house earlier
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