Financing Alternatives to the BanksBy Caitlin in Finance
The traditional approach to obtaining a loan, a mortgage or refinancing your home is to go to a bank. But what other options are available to you? Could you actually save money by not going to a bank? The answer is yes.
Save with a Mortgage Broker
There are many alternatives to banks including private lenders, credit unions, co-ops and other lending institutions. Dealing with them at an individual level might prove difficult, therefore we strongly recommend you seek the assistance of a mortgage broker.
The easiest way to find a financing source that’s cheaper than a bank is to see a mortgage broker. Brokers know the market and know about the different financial products available to you. Mortgage brokers work for you, the borrower, and as such aim to find you the best possible rate for your loan. They do the shopping for you too, so it’s a great way to save both money and time.
Solutions for individuals with bad credit
If you are suffering from bad credit, don’t worry! It’s quite easy for you to find a loan, even without the banks.
Renting to Own
If you have a bad credit score and do not qualify for traditional loans, renting to own is a great way to start working towards ownership of the home of your dreams. Renting to own is renting with the option to buy: you are basically given the option to purchase the home you want within a specified period of time.
Some of the benefits of renting to own include using a lower down payment, building equity, avoiding closing costs and repairing your credit score.
Read more about the rent to own home ownership program.
Another great source of financing for individuals with credit trouble are private lenders. Private lenders aren’t as interested in your income or credit score as the banks are and their lack of compliance standards and regulations mean that they can close a file in just days, usually in under 48 hours.
Another option to a mortgage from a bank is seller financing. In this situation the buyer actually owns the property while the seller takes on the role of the lender. The buyer pays mortgage payments to the seller (this is not rent, they are real mortgage payments). The buyer benefits first and foremost by purchasing a home, but also by building credit. In case of default, the seller is protected by holding the note on the property. The seller can lend to anybody: bad credit, self employed, bankruptcy – you name it!