Can You Still Buy Without a Fixed Mortgage?

Buying a house doesn’t necessarily require getting a 30-year, fixed-rate mortgage.

More and more people are exploring alternative financing plans as it gets harder to get a conventional bank loan.

Here are some creative ways to pay for a home, according to some financial experts:

  • Securities-backed loans. The lender gives the borrower 80 percent of the value of his stock portfolio. Then the lender holds the stock for between three and 10 years while charging a 3 percent to 5 percent interest on the loan. At the end, the borrower gets his original shares back. Both win if the stock has increased in value.
  • Two-step mortgages. This fixed rate mortgage is amortized over 40 years, but the payment schedule is adjustable.
  • Constant-amortization mortgage. Buyers start with a higher payment, but the loan is constantly re-amortized, so principal is reduced faster than with a conventional loan.
  • Family loans. In the most successful arrangements, the family puts the agreement in writing and the lender charges the borrower a rate of interest high enough to pass IRS scrutiny, thus avoiding any gift tax.
  • Assuming a mortgage. Buyers interested in purchasing a house in the pre-foreclosure stage might ask the lender if they can assume the mortgage. In some circumstances this can be a good deal.

Source: Forbes, Matt Woolsey (01/26/09)

Author: niaknowles

From Native New Yorker (Brooklyn) to Atlanta Realtor, with a love for architecture and design. Atlanta based Real Estate Consultant working to restore and sell Intown Homes; REO,South West (Westside,West End, Westview Communities 30310,30311,30314,30318 zip codes)

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