4 Routes to Homeownership
If you’re tired of paying rent every month with no long-term benefits, homeownership may be the answer to your problems.
Want to know more about making your dreams of owning a home a reality? Check out these four ways you could take to sign a deed to your new home.
1. Procuring a Mortgage
Housing prices are rising, but the traditional route of achieving homeownership is still available. The mortgage industry remains so lucrative that new companies to service them are popping up all the time, giving consumers more options for finding agreeable terms.
Younger clients prefer purely online experiences to in-person interactions. Many of these new mortgage companies, like American Financing, have embraced online applications to create a stress-free process for prospective buyers.
Buying a home with a fair and stable mortgage rate still depends on the alignment of a few highly sought-after conditions. Desirable salaries, the ability to provide a sizable down payment, and good credit are usually required to purchase most dream homes. Not everyone can provide all three, but luckily there are alternatives.
2. Buying Discounted Homes Outright
While cutting coupons may not work for housing, there are discounted homes available if you know where to look. One of the best ways to find affordable housing is by attending house auctions that feature highly reduced rates.
Usually, the properties being sold are recently foreclosed upon, and the lender is looking to recoup as much of their money as possible quickly. This creates a brief buyer’s market scenario for eagle-eyed purchasers to take advantage of.
3. Rent-to-Own
Rent-to-own (aka land installment) contracts have been around for a while. However, they are perhaps the riskiest process of procuring a home on this list. These deals operate by allowing prospective buyers to move into the house and, in place of rent, pay their down payment of the house in installments. This is quite the appealing offer for would-be homebuyers without the savings or credit to secure a mortgage.
However, if the tenants choose to leave or are evicted from the property, the installments are converted into rent, and the value is therefore forfeited. Most of these land installment contracts stipulate that tenants are responsible for all repairs to the home, often demanding specific improvements are made by provided deadlines. If they cannot meet these demands on time, they can be evicted without any protections usually afforded to them by the mortgage process.
If you pursue this path toward homeownership, it is highly advised that you research the property and its firm thoroughly before moving forward.
4. Co-Buy Your Home/Tenancy In Common
One of the many reasons some millennials are not pursuing homeownership is the pressure of repaying student loan debt with salaries that fail to assist them in recouping the value of their degrees. In solidarity, many have begun pursuing an innovative new way of purchasing homes: together.
A Tenancy In Common (TIC) agreement is when multiple parties agree to co-own a property. As millennials trend toward concentrating on their careers and consider starting families later, their interest in accruing value through property ownership hasn’t waned. Friends and roommates are pursuing homeownership in trusted partnerships.
Naturally, this method has its pitfalls. Messy financial and legal repercussions could result from differing life plans. If you’re considering a TIC, only do so with parties you trust and are capable of synchronizing long-term intentions with.
From Dream to Reality
As you decide which homeownership method is suitable for you, you must assess your financial resources, credit history, and life intentions. Whether you’re looking to hunt down the deal of a lifetime at an auction or have found someone you’re ready to invest in property with, know that it’s possible to achieve your dream of owning a home.
The economy may be in constant flux, but the ingenuity of determined house hunters will always hold strong.
