America is experiencing a profound housing shortage, not just here in Eugene and Springfield Oregon.…
Lucky for you, home financing has gotten a lot easier! The old restrictive options may have worked for a lot of years, but new technologies and fresh perspectives are changing the way banks do business.
When it comes to paying for a new home, you can never have too many financing options. Sit back and read over some financing tips that will get you into a home. Your current credit situation may not hold you back!
If your credit is lacking in any way, consider a co-borrower. If your parents have major credit, ask them to co-sign the mortgage with you. Of course, mom and dad must have good credit. You also have to pay the loan or else they will be responsible for the payment.
An interest-only mortgage is just what it sounds like. You pay only the interest on the mortgage for a set term. This choice is good for investors. It’s also a good choice if you don’t plan on staying in the home long.
If saving money is a goal or if you’re planning on selling the home soon, talk to a lender about an interest-only loan.
Ask for A Gift from Family
The IRS announced that the annual gift exclusion amount for 2019 will remain $15K. That amount is per individual, so that means that each parent can gift you the $15K. That can amount to $30K from one set of parents to you and your partner, and that amount can definitely help with your down payment or your home warming.
Borrow From Your Retirement Fund
Your retirement fund may allow you to borrow up to $50K or 50% of your 401K plan, whichever is lesser. If you’re a first-time home buyer, you may qualify to take up to $10K from your IRA without paying the early withdrawal penalty. Check your plan; some will allow you to borrow and you can find the details in your retirement paperwork or from your benefits advisor.
Re-Fi Your ARM
If you own a home with an adjustable rate, or ARM, call the bank and ask them for a re-fi. ARM’s start out with a smaller interest rate, and then after 1, 3, 5, 7, or 10 years, the interest rate goes up. You may have gotten a lower rate to start your mortgage, but you need to pay attention to your terms because an increased rate could put you into a much larger monthly mortgage payment.
Some banks are proactively contacting customers with ARM’s and suggesting a re-finance of their loan to put them into a fixed rate. Banks know that they stand a chance of losing the loan or worse, foreclosing on a house if a homeowner can’t make the new mortgage payment.
The Bottom Line
Buy a home on your own terms! The obstacles may seem insurmountable, but when you stop and think about alternative sources to home financing, you will find that options abound. Sit down with a pad of paper and write out all your income sources and assets. You may have found money hiding right within your own circle of family and friends!