Listed below are five alternative methods of paying for a home, courtesy of some experts in the financial field.
1. Assuming a mortgage. Buyers that are made-aware that a home that they are interested in is actually in the stages of pre-foreclosure may ask the lender about the possibility of assuming the mortgage. In the right set of circumstances, this could be a great deal for the buyer.
2. Constant -amortization mortgage. This type of loan is where the buyer begins the loan with a higher monthly payment. The loan is constantly re-amortized and in turn, the principal goes down faster than that with a conventional loan.
3. Securities-backed loans. This type of loan involves the buyer's stock holdings. The lender gives the buyer 80% of the total value of his or her stock portfolio. In turn, the lender holds the stock for any period between 3 and ten years. During this period the buyer pays between 3 and 5% interest on the loan. At the conclusion of the loan, the buyer receives his or her original stock shares. Both the bank and the buyer win out in this scenario if the value of the portfolio has increased over the loan period.
4. Family loans. This scenario can be one of the most successful. In this arrangement, the family makes the agreement binding in writing. The family member who is the lender of the funds charges the borrower an interest on the loan which is high enough to pass the possible scrutiny of the IRS. This in turn will avoid any gift tax.
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