There may be several reasons why you might not be able to obtain a regular mortgage. Maybe lenders see you as a financial risk because of your credit, or maybe you’re unable to show consistent monthly cash flow. You could also be a business owner who’s income is not always stable. Whatever your reason is, there are additional options that you might be able to use purchase a home.
Here a few options you could take advantage of.
- You could borrow from your whole life policy. Since this type of policy will accmulate cash over time due to interest, it is possible to borrow against this cash. In addition, there is no qualifications necessary.
- You could bypass the bank and deal directly with the seller of the house. Negotiate an interest rate, payment schedules and the consequences if you were to fall into default. Sometimes this option is available if the homeowner is already have a problem selling the house. However most of the time you will not be offered this option because the seller either doesn’t own their house outright or they do not want to become lenders. If the seller offers this type financing option, it could have several benefits for the buyer. You can bypass any specific bank requirements, its cheaper, and the entire process is much faster. All the terms and any flexibility offered is agreed between you and the seller.
- If you have a self directed IRA which is different than your traditional IRA, then you might be aware of the available investment options. A self directed IRA will allow more options. You won’t be able to purchase a home with your own self directed IRA but if you know of someone else who is not a relative or a business partner, you can then use their self directed IRA to lend you the cash to purchase the property.
- Your 4th option could be a rent to own option. This option allows you to rent a property for a specific time frame with an option to buy at the end of the term. Your rent will be a little higher with the extra amount being used as a down payment once you’re ready to buy. If you change your mind though, you will lose the extra amount that you’ve been paying. This option can be good for those who are not in the financial position to buy but maybe expect to buy in the next few years. It’s also used as an option for those who are looking to improve their credit score before applying for a loan.
If you’re having a hard time qualifying for a mortgage, there is available options to purchase a home without obtaining a traditional mortgage from a bank. However do not pursue these options if you have poor credit or really cannot afford a home right now.