If you’ve been recently in the market for a home, you know all too well the challenges of affordability here in the San Francisco Bay Area. No doubt you’ve prepared yourself with a hefty down payment, a personal letter of introduction complete with pictures, as well as an iron-clad pre-approval from your financing sources and proof of your down payment funds.
While home affordability problems grow, there is also some good news: alternative and creative ways to finance a home purchase. Let’s explore a few non-traditional home loan sources.
Alternative Home Lenders
Online mortgage originators are earning market share. Alternative lenders like Rocket Mortgage and Lenders Network are streamlining the mortgage application and funding process. Companies like Lenda can offer better rates and low (or no fees) compared to traditional bank lending. These online lenders are used to freelancers and business owners where income documentation can be more problematic.
Home Equity Investors
To help with cash-strapped buyers with good credit, there are firms like Unison who are willing to invest in the home purchase. Unlike a mortgage with interest rates and monthly payments, an equity investor earns a stake in your real estate asset. So when your home’s value increases, they share in the gain. If home values dip, they share in the loss. But buyers have to have skin in the game. For Unison to consider partnering in your purchase, you need to have at least 10% as a down payment.
Crowdfunding Your Down Payment
Move over Kickstarter and Indiegogo, sites like HomeFundIt are helping home buyers build a crowdsourcing campaign and share their story via social media networks. There’s a timeline where the user must close on their home within 12 months of receiving their first gift.
For a more DIY approach, wedding registry accounts offer another way for couples to source down payments. All you need is a bank or PayPal account to accept money gifts along with a way to get the word out to family and friends.
Whether you’re using traditional funding or creative sources to buy your next house, you’ve got a knowledgeable guide. Even in this hot market, I’ve helped buyers just like you successfully negotiate into their next home.
Photo credit: Nattanana23