3 Reasons To Choose An Alternative Mortgage
Buying a home typically requires that a potential homeowner secure a mortgage loan to cover the purchase price of the property. Traditionally, banks have been the ones to provide these home loans to the public.
As banks enforce stricter requirements when vetting potential borrowers, many Americans are finding themselves unable to secure the loan needed to purchase a home. You might want to consider an alternative mortgage through a non-bank company that doesn't accept consumer deposits if you fall into one of the following categories.
1. You have imperfect credit.
In order to qualify for a mortgage loan through a bank, you will be expected to have squeaky clean credit. Unfortunately, periods of financial hardship have left many Americans with less-than-perfect credit.
A low credit score doesn't necessarily reflect your ability to make monthly mortgage payments, and non-traditional lenders understand this fact. If your credit score is too low to qualify for a traditional mortgage, consider financing your home through an alternative source instead.
2. You have little net worth.
Your net worth can have an effect on your credit score. Individuals who have acquired cars, boats, and other financed items have the credit history to reflect this accumulated net worth. Young couples who are just striking out on their own might not have the credit history needed to establish a high credit score.
If you are among those individuals with little net worth, you might have better luck financing your home through a non-traditional lender. These companies look more at your ability to repay in the future than your payment history in the past. This allows you to qualify for the funding needed to make home ownership a reality.
3. You are self-employed.
Statistics show that 14 million Americans are self-employed. Although being your own boss gives you control over your financial future, it can be a detriment when it comes to securing a traditional mortgage loan. Banks don't like the fact that a self-employed individual's income fluctuates from one month to the next.
Big financial institutions view this variance as a hazard and may consider a self-employed applicant too risky. Non-traditional lenders appreciate the fact that self-employed individuals might have varying monthly incomes and focus on annual salaries instead. This broader view of your financial status can help you qualify for an alternative mortgage when purchasing your next home.
Don't be afraid to utilize alternative mortgage lending resources if you don't meet the rigid standards of your bank. An alternative mortgage may be better suited to fit into your financial lifestyle.
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