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Mortgage Loan Alternatives

3 July, 2011



More than 90% of the people would want to live in their own home and they do not want to face any hassles such as paying rent etc. Home buyers would go for the option of mortgage personal loans with bad credit to purchase their home. Buyers should also know the fact that, they not only have the mortgage loan option. Apart from this particular choice, they also have few other choices which are as listed below. This article would be useful for those who either do not want to go for a mortgage loan or for those who were not able to qualify.

Conventional mortgage loans cannot be obtained by poor credit borrowers since lenders would not be ready to sanction the loan to the borrower. Lenders would not be ready to approve mortgage loan to people who have an unstable or fluctuating income. None of the lenders would be ready to choose a risky investment option whatsoever.

Insurance policies

Home buyers can obtain the money they need from their own insurance policies. Certain insurance policies would have life cover and people can make use of this to obtain the money and in turn this can be used for purchasing a home or property. Whole life insurance policies are the ones wherein the insurance premium paid by the person would be accumulated over the entire lifetime.

Apart from the insurance premiums, interest and dividends on the insurance amount would also get summed up and finally, the person would be able to obtain a considerable amount of cash which can be utilized by them at some point of time during their lifetime. Utilizing it for buying a new home is one of the best options. Before choosing this option one has to clarify a lot of questions with the insurance company and few of the important queries that have to be asked by the person are –

  • Interest rate charged on the loan?
  • Is there any tax implications linked with it?
  • Would there be any alteration in the annual dividend?
  • Opportunity costs involved etc.

Seller financing

This particular option is also chosen by most of the home buyers. In this type, the home buyer would perform the financial transaction between the seller and the buyer. A promissory note should be signed between the home seller and the buyer in order to make sure that both the parties mutually agree to all the terms and conditions mentioned in the agreement. Sellers would not want to become lenders mostly and it would be difficult to convince them to go for seller financing.

Seller financing would possess a lot of advantages when compared to the traditional mortgages offered by banks and financial institutions. Terms and conditions would not be as strict as a traditional mortgage. There would not be any penalties or fees pertaining to the loans no credit check amount offered.

Self directed IRA

This is another option which would help those who have made investment in various nontraditional assets.

Renting or leasing option

Rent-to-own agreement or lease-to-own agreement has been in practice in recent times. The home owner would make an agreement with the tenant stating that they would rent the property for certain period of time and by the end of the agreement period, they would buy the property.

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