When it comes to buying real estate, financing is often the biggest concern. Even with the real estate market undergoing tremendous crisis as of late and home prices going down, many still could not afford to make the purchase out of their own pockets. Opting for financing institutions can pose a problem particularly for those with a bad credit standing. However, there are more options available than you initially think.
Here are some of the great financing options for those looking to make a real estate purchase:
1. Traditional financing options – This route involves borrowing money from banks or credit unions, as well as other loan companies that specialize in mortgages. You can choose between a 15-year or 30-year fixed rate that would also determine the interest rate placed on your mortgage loan. This is a bit tough to apply for, though, given that many lenders have tightened their criteria.
2. Subject-to method – If you are looking for an immediate source of financing for your real estate investment, this is the best solution. Take note that it is only good as short-term solution, though. The term actually refers to “subject to existing financing”; therefore, you will be able to purchase the property provided that the existing financing is still active.
3. Seller carry back – This is a creative financing option for those who are looking for an alternative to the traditional financing methods. This is recommended for those who are savvy investors that will enable you to buy using other people’s money, thus reducing the risk on your part because you are not utilizing your own for the purchase.
4. Lease option – This is the last resort for those who cannot find a reliable financing option for their real estate investment. You can get the property even without downpayment, or only a small percentage, until you earn the right to purchase the property. This usually ranges between 2-3 years, which should give you enough time to find a financing option.