Top Home Loan Alternatives for Prospective Homeowners
Looking for a home loan? There could be many reasons why you want to steer clear of traditional home loans.
The sheer number of requirements for home loan borrowers mean that you may not be the best candidate for a traditional home loan. Non-traditional alternatives may offer more favorable options for you. There are many benefits, including more affordable interest and the ability to get approved in a matter of days. Keep reading to learn about your options if you are looking for non-traditional home loan alternatives.
Private Money Loan
Private money loans are loans obtained from private and non-bank sources of funds. This could be anyone you know, such as a co-worker, friends or your parents. This is a good option for borrowers who struggle to get home loans the traditional way. The good thing about private money loans is that, unlike a traditional bank or financing loans, you can get better repayment terms and flexible repayment periods because you are dealing with a friend or a family member. Private money loans may even come with zero interest if you manage to negotiate well enough with the person lending you the money. Home loans from friends or family members are not uncommon but just like any other loan, it is always better to have an official agreement going so you can give your assurance that you will repay the loan on time.
Hard Money Loans
Got any real property that you can afford to use as security? You can opt for hard money loans if you have property that you don’t use or if you need to raise money quickly. A hard money loan is an unconventional home loan strategy because you are not dealing with a bank, but with another individual or a financing company. Hard money loans rely on the value of your collateral and not on your credit or financial history, which makes this type of loan another attractive option for those who cannot secure home loans the traditional way.
Bridge Loans
Bridge loans are short-term loans that are paid off from earnings coming from the sold property. This is ideal for those buying a new home before their old home sells. Property flippers can also use bridge loans to buy off property and pay off the loan when the renovated property sells.
No Documentation Mortgage
If you prefer not to disclose information about your current financial situation, you can opt for a no documentation mortgage, which is also known as a no-doc loan. You are not required to submit any paperwork that verifies your income, employment, or assets to get approved. This type of non-traditional loan is good for self-employed borrowers or those whose main source of income comes from assets.
Bitcoin and Cryptocurrency
If you have crypto assets you can leverage your digital currencies and use this fund towards getting a home loan. There are many banks that now offer cryptocurrencies as collateral for a home loan. Borrowers can get their crypto assets back once the loan has been paid off. This is a great way to use the increasing value of bitcoin as security for a loan without the risk of losing cryptocurrency assets. Bitcoin mortgage programs offered by financing companies also come with fast-tracked processing, instant loans, no appointments, and even loans without credit checks because your chances for approval mainly depend on the value of your cryptocurrency. Borrowers also get to save on taxes because they are not doing a BTC sale which means there is no income tax or capital gains tax due on the transaction. This is a good option if most of your assets are in Bitcoin. Real estate is not yet directly purchasable using Bitcoin which means that the only way to get started on owning your home is to get a loan using crypto assets as collateral.
Be sure to see our previous blog on DeFi lending as well. It is found here: https://xoticproperties.com/what-is-defi-lending-and-how-can-i-buy-a-home-with-it/
Final Thoughts
Bad credit, insufficient liquid funds, and all the hoops you need to go through for a traditional home loan are just a few reasons why conventional home loan options are starting to decline in popularity. The good thing is that there is no shortage of non-conventional home loan options that can help you get the home of your dreams. Opt for a private loan from a trusted friend, use your crypto assets or use real property as collateral. With all these options, you can be empowered to pick the option that works best for your current financial situation.
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For more home improvement tips check out our other blog posts.
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