4 NonTraditional Ways To Finance A Home

Dated: 08/08/2017

Views: 93

This information is brought to you by

Harold and Tara Winey

The Richwine Group powered by eXp Realty

4 Non-Traditional Ways to Finance a Home




A 30- or 15-year, fixed-rate mortgage with the same payment amounts each month is one of the most common ways to buy a home.

But not everyone can qualify for a traditional mortgage, or has the money set aside for a sizable down payment so they can get a low-interest loan and have affordable payments.

Here are four non-traditional ways to be able to afford to buy a home:

1. Borrow from your parents: If you don’t mind possibly changing your relationship with your parents, ask them for a loan to help you come up with a bigger down payment so you can qualify for a loan. Hire a lawyer to write up a contract and make sure the loan doesn’t appear as a gift, which would require a gift tax to be paid.

2. Parental co-signers: If your parents won’t loan you money, ask them to co-sign your home loan. This can improve your debt-to-income ratio, making you a better risk to the lender. But your parents should be aware that if you don’t make loan payments, they’ll be liable for them.

3. Borrow from a retirement account: If you have enough money in your 401(k) or IRA, you can borrow money from yourself if you use the money for a down payment on a house. Or you could use the retirement funds to show a lender that you have a lot of money in savings to make loan payments if you lose your job.

The downside is that if you’re 59-1/2 years old or younger and withdraw any of your retirement savings, you’ll pay a 10 percent penalty and will pay taxes on it. The money will have to be repaid within 60 days if you lose your job.

A Roth IRA is after-tax money, so withdrawing from it to buy a home means you’ll only be taxed on the earnings, not the full amount.

4. Insurance policy with cash value: Some life insurance policies allow policyholders to borrow against the principal or cash value, and the money can be used for whatever they wish, including a home purchase. The loan won’t have to be repaid—although not repaying it will leave a lower death benefit.

Whichever non-traditional strategy you use to finance a home, talk to your financial adviser and tax preparer for details on how it will affect your finances.

Aaron Crowe is a freelance journalist who specializes in personal finance topics.


Harold and Tara Winey

Realtor, ABR, GRI, CRS

The Richwine Group powered by eXp Realty

16427 N Scottsdale Rd

Suite 410

Scottsdale AZ 85254

Office: (480) 437-4271

Mobile: (480) 437-4271

Integrity Trust Results

Send me a message

tarawiney.phx.exprealty.comrichwinegroup.com

Want to Advertise on this Site?

Latest Blog Posts

How To Get 20 Years Out Of A Hot Water Heater Chandler AZ

How to get 20 years out of a Hot Water HeaterI have a rental where the Hot Water Heater (HWH) went out. It was original from 1998 when the home was brand new. This particular one was an A.O. Smith.

Read More

4 NonTraditional Ways To Finance A Home

This information is brought to you by Harold and Tara WineyThe Richwine Group powered by eXp Realty4 Non-Traditional Ways to Finance a HomeA 30- or 15-year, fixed-rate mortgage with the same

Read More

The Incredible Joy Of Owning Your Home

If you haven't bought a home yet, you're missing out on a wonderful feeling! That moment when you walk through your doors, throw your purse or keys on the floor, plop down on your couch and breathe

Read More

Dont Replace Your Agent With The Internet

With the influx of new technology and web based solutions, it isn't a surprise that everything is moving fast into the era of the internet. From sites like Uber to Grubhub, we generally can pull up

Read More