Millions of Americans purchase homes in their lifetime to become homeowners, but it’s important you avoid risky loans.
Many people opt for a mortgage for their home.
This is an agreement between a person buying a home and a lender.
According to data from the Pew Charitable Trusts, one in five homes are purchased a different way, reports The Sun.
Around 7 million Americans choose to do this.
This is happening because lenders are struggling to give smaller mortgages at a profit.
Most people can’t afford half of the homes for sale in their market.
Homeowners: There’s a $2,000 tax credit each year you may qualify for
Why choosing to be a homeowner using risky loans is a bad idea
Alternative loans are usually given to those that can’t get a traditional mortgage.
These loans have higher interest rates, bad contracts, and a better chance of losing the home altogether.
There is less protection with a loan like this.
Alternative loans that are safer for hopeful homeowners
The more favorable alternative loans include personal property loans, lease purchase agreements, and seller financed mortgages.
Personal property loans are more regulated but have higher interest rates.
Lease purchase agreements are rent-to-own agreements between a renter and the homeowner.
The contracts are legally binding.
A seller financed mortgage lets the seller handle the mortgage instead of a bank.
This means the buyer signs a mortgage with the seller of the home.
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