Two Specialty Home Loans That Can Help You Get Approved
It's no secret people are having a tough time buying homes these days due to a number of factors, such as extremely competitive markets. If you're looking to buy a home but are having trouble getting approved for a traditional loan, here are two specialty programs you may want to consider.
Low Income High-Asset Loans
Wages are one of the top reasons people are struggling to buy homes. A lot of folks just don't make enough money to qualify for properties in the areas they want to live. Luckily, there are a number of programs aimed at helping these types of applicants get into the homes of their dreams, and one of those is a low-income high-asset loan.
Instead of qualifying based solely on a person's monthly salary, a low-income high-asset loan factors in the value of the applicants assets. For instance, if someone has a trust that held stocks and land, the lender would calculate the equivalent monthly income value of that trust and add it to the person's wages to improve their eligibility for a home loan.
The idea is that—if necessary—the assets could be liquidated to pay the mortgage. Thus, to qualify for this type of specialty loan, you must have assets you can easily access, and those assets must be located in the United States. Some banks still have a minimum income requirement, but it's usually less than what's needed for a traditional home loan.
Individual banks that offer low-income high-asset loans may have additional qualification requirements, so it's best to contact the lenders directly for more information or consult with a home loan broker.
Extended Term Loans
The most common home loan term length is 30 years, but this is just an industry standard. Home loan terms can be as long as 40, 50, or even 100 years as long as all parties agree to the contract conditions. So, while some people may opt for shorter-term lengths (e.g. 15 or 20 years), you may increase your chances of getting approved for a loan by looking for a lender that offers terms that exceed 30 years.
Because the cost of the home is stretched out over a longer period of time, the monthly mortgage will usually be less. This means the amount of income needed to qualify will be lower, making it easier for someone with limited funds to buy the home they want. Additionally, longer terms may also mean a lower interest rate, since the bank will actually make more money in the long run.
Be careful, though, some lenders may require you to do several years of interest-only payments before applying anything to the principal, which could mean more money out of your pocket over the life of the loan. Take time to fully understand the loan terms and what it means for your finances before signing on the dotted line.
For more information about these or other loan programs, contact a local mortgage lender.
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