Thinking Outside the Bank: Four Non-traditional Ways to Pay for Your Home

Posted: May 5th, 2011 by Just Real Seattle

If you find yourself out of luck getting traditional financing for a home, consider these handy alternatives:
 
1) Borrow from your whole life insurance policy: A whole life insurance policy is one that accumulates cash value over time as you make your regular premium payments and earn dividends and interest. There is no loan process but make sure you note that any borrowed amounts deduct from your principal.

2) Obtain seller financing: If a seller is having difficulty selling their home, they may be willing to act as a lender to the buyer. The terms of such a loan are agreed upon by both parties.

3) Borrow from a self-directed IRA: Self-directed IRAs allow for broader types of investments. While the policyholder cannot purchase a home directly from their own policy, they can borrow from someone’s IRA who is not directly related to them.

4) Rent to own: This allows a homebuyer to rent a property for a specified initial term with an option to buy the property at the end of that term. Monthly rent payments are generally higher than market price, with the surplus going toward a future down payment. However, if the buyer opts not to purchase the property, the extra rent is forfeited.

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