Real Estate Financing:
Real estate financing would help you get about 20% of the total amount you require for buying your home. Provision of the remaining 80% of the loan would be your responsibility. These figures however, vary across different countries.
The real estate financing can best be summed up by the following points:
1. Gifting programs. In some cases, one may get a piece of land on one’s own with a down payment that makes a mere 3% of the total amount. In different parts of the country, builders fund the basics which ensure this down payment. FHA and various other lenders have accepted this as a standard and also allowed it.
2. No-doc loans. This means a low certification requirement. Low-doc loans are available from various banks and the rules vary according to the case. This scheme comes with a helping hand for people with bad credit. They are required to make a payment of 20%-30% payment of the total amount. Moreover, you do not need to have a job for being eligible.
3. FHA loans. It means Farm Home Administration. It does not credit the money, but guarantees your credit from the bank. So you can get a credit of up to 97% of the purchase price. However the figures may fluctuate.
4. VA loans: The VA loans are meant for people with better incomes. If you have been in equipped services for long, have a nice job, and can keep two or three paychecks, you would be able to get this type of loan easily.
5. Land contract: Land Contract is also called “bond for sale”. There are many other names for it. It depends upon the country in which you are staying. It also depends on the resources that you are using. The interest rate is determined by the bank itself. The issues on down payment, interest rate etc. is done on a mutual contract basis.
6. Seller-carried next mortgages. A few banks allows a small amount like 5% into a home buy, they will make you take a loan of 80%. The vendor may obtain payments on a subsequent mortgage from you for the extra 15%.
7. State covering programs. There are loan guarantee programs in different states and many types of financial assistance are offered to the public. These are only meant for the low income buyers and also for absolute loans.
8. Family loans. This is a kind of interest which the bank charges if your family member or friend lends you an amount to buy a house. It is 7% of the actual amount and the bank would charge an additional 2% for it.