Mortgage affordability reckons on you
You’ve heard the advice, “Before you shop for a property, meet with a lender and get preapproved for a loan. The lender will tell you exactly how much you can afford to borrow.”
That advice seems right. Why pore over the menu at the Ritz Carlton when your budget says McDonald’s? But here’s the problem—and the opportunity.
In the world of property finance — for home buying and investing—the loan market offers thousands of lenders and hundreds of financing techniques. Plus, interest rates, closing costs, credit standards, and underwriting guidelines vary among lenders.
Read through the following list of 65 affordability techniques; these techniques only sample your loan alternatives. Because you enjoy a cornucopia of choices, no loan rep (or anyone else) can tell you exactly how much loan (or how much property) you can afford until they work through these and other possibilities. If one lender (or seller) says, “No,” you say “Next.”
Selected Sources and Techniques to Achieve Affordability
Accessory apartments
Adjustable rate mortgages
ARM assumptions
ARM hybrids
Balloon mortgages
Blanket mortgages
Buy a duplex, triplex, or quad (tenants pay mortgage) City down payment assistance
Co-borrowers
Co-ownership
Co-signers
Community reinvestment loans
Compensating factors
Contract-for-deed
County down payment assistance
Create value/fixer-uppers
Employer-assisted mortgage plans
Energy efficient mortgages
FHA assumable w/qualifying
FHA Title 1 home improvement loans FHA 203(b)
FHA 203(k)
FHA 203(b) mortgages
FHA 203(k) mortgages
Fannie Mae affordable mortgage programs
Fannie Mae Community Home-buyers programs Fannie Mae Start-up Mortgage
Fannie 97
Financial fitness programs
Freddie Mac central city mortgage programs Gift letters
Government grant money
Habitat for Humanity homes
Homebuyer counseling centers
Homebuyer seminars, fairs, classes HUD/FHA foreclosures
HUD homes with easy financing
Interest rate buydowns
Interest rate buy-ups
Interest only mortgages
Lease-options/lease purchase
Lease-purchase agreements
Mortgage credit certificates (MCCs)
New home builder finance plans
Not-for-profit grant money
Option ARMs
Owner will carry (OWC)
Pledged collateral
Private mortgage insurance (PMI) Reverse annuity mortgages
Second mortgages
Self-contracting
Shared equity
Shared housing/housemates
State mortgage bond programs
State VA mortgage programs
Subprime mortgages
Sweat equity
Tenant-in-common (TICs)
USDA Rural Development Loans (formerly FmHA mortgages) VA assumable w/qualifying
VA mortgages
VA REOs with
VA financing for non-veterans
Wraparounds
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