Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 The current lending market is seemingly at a stand still. Thousands of homeowners are in foreclosure and thousands more are well on their way. Banks aren't exactly in the most generous of moods and loan requirements are as stiff as ever. So, where do you turn if you'd like to buy a house but don't have a briefcase full of cash?
Believe it or not, despite the "credit crunch," there are still ways to find money to borrow in this market. Alternative lending options are popping up and becoming more popular as the need for them increases. But remember, these alternative lenders are also trying to avoid future foreclosures. So, before deciding on a lender, be sure to know your specific needs. Talk to a professional and have your paperwork in order before bringing your case to a lender. Purchasing a house can be within your reach as long as you can prove that you have the ability to pay back your loan and that the desired property passes the lender's requirements.
The following are some of the alternative banking markets that are replacing subprime mortgages:
Credit Unions
Like banks, credit unions offer 30-year fixed-rate mortgage loans, ARMs, and hybrid mortgages. However, credit unions can offer these home loans at lower rates than banks, which makes the loans less vulnerable to foreclosure. In fact, in light of the current credit crunch, these lower rates directly resulted in fewer foreclosures on loans granted by credit unions. Mortgage loans from credit unions actually increased in 2008 while others crashed and burned. For the most part, they can set their own loan requirements, which may sometimes be limiting.
Federal Housing Administration
Finding a loan can be made relatively easy, if you qualify to receive help from the Federal Housing Administration. The FHA has been around for a long time as part of the department of Housing and Urban Development (HUD) agency. Their primary purpose is to provide loans to low income families who would not normally qualify for convention loans. The FHA is projected to expand in the near future, granting significantly more loans because of their increased loan amounts. Their loan model involves low down payments and covered closing costs, which makes it very attractive to borrowers looking for help.
Local and State Housing Agencies
It's a good idea to look into what kinds of mortgage "deals" your local government is offering. Many now offer housing loans to low income families that qualify, first-time home buyers, and those who have government service jobs (ie: fire fighters, police officers, teachers). You can get more information about these offers from the National Association of Housing and Redevelopment.
Rural Housing Loans
Another loan option in the credit crunch is the Rural Development Housing and Community Facilities Programs of the U.S. Department of Agriculture. This is a sensible alternative, particularly if you live in a rural area and qualify as low income. These mortgage loans are usually marketed to those with little to no money to put down. They also offer flexible guidelines and better rates than conventional fixed rate home loans.
Private Lenders
In the past, private mortgage lending consisted of close family or friends helping each other out. However, there are a handful of wealthy lenders willing to take on the risk, even in today's market. Private lending involves an individual investor acting as a mortgage lender. The investor, however, can set his/her own rates, which usually tend to be higher than the bank's. On the other hand, the borrower can receive a home loan that he/she wouldn't normally be able to obtain. If you decide to go with a private lender, make sure that every detail of the loan is in writing.
Finding a loan in today's credit crunch doesn't have to be a headache. With so many alternative lending options out there, you're sure to find one that fits what you're looking for.
