What do you do if your financial strength isn't that great, but you want to buy a home? You can either wait until your financial situation improves or you can get smart and look for ingenious ways of affording the house now. Here are some of the routes to take if you opt for the latter option:
Join Forces With Another Person
You don't have to buy a property alone; you can pull your resources with another person. This is known as co-buying, and you can do it with anybody, provided you have an agreement on how you will both use the house. For example, you can join forces with a relative and agree that you will buy their share of the house when your finances improve or after some years. You can even decide to buy a house with a close friend or sibling and live in it as roommates. Just make sure that you are ready to hold up your end of the bargain and that the agreement is legally binding.
Get Down Payment Assistance
Different organizations offer down payment assistance to those who meet their prerequisites. This route is viable if you are confident of your ability to pay the mortgage, but you don't have the down payment money. For example, the Federal Housing Administration (FHA) will give you a house loan with a 3.5% down payment if your credit rating (on the FICO Score) is at least 580.
Try Seller Financing
Another option you can try, if down payment is the issue, is to buy your property via seller financing. In this case, you don't take a mortgage from a bank or any lender, but rather you make an agreement with the property seller to make regular payments for the house, with a balloon payment after five years.
You should only consider this option if you know you will be able to qualify for a regular mortgage in five years' time. When that limit reaches, you can take the regular mortgage, make the balloon payment, and then service the mortgage as usual. Just note that the interest rates for seller financing are usually higher than those for regular home loans.
In addition to the above tips, you should also look for affordable properties so that you don't go for a very big mortgage. For example, you can opt for peri-urban locations instead of urban centers or ignore the luxury features that usually make properties expensive. A real estate agent can also help you negotiate for the best property price possible.