Conventional home loans are a great way to get the money you need to buy a new home.
Unfortunately, not all home buyers qualify for a conventional mortgage. Lenders have strict requirements, which means a minor issue can disqualify you from typical mortgage programs.
This is where non-traditional home loans in Florida can help. Loans are available for people who can’t get traditional loans or are looking for different terms.
Is getting an alternative loan right for you? Take a look at the benefits below to decide.
1. Approval Is Quick and Easy
You are not alone – many people struggle to qualify for traditional mortgage loans. Traditional mortgage lenders have strict requirements that are hard to qualify for if you have challenged credit, which means you must spend a lot of time improving your financial status. That could take some time, and you may need a faster solution.
Here are some of the things that can disqualify you from a loan:
- Poor credit score
- No credit history
- High debt-to-income ratio
- No steady employment (a problem for self-employed individuals)
- Low monthly income
While these things can be reasons for concern, they aren’t always a good reason to disqualify someone from a mortgage. You can find non-traditional loans that have less-strict requirements that can make qualifying quick and easy.
2. More Flexibility
There’s not much flexibility with traditional mortgages. You typically apply for a mortgage, go through the underwriting process, and get your mortgage. It will be a 15 or 30-year fixed-rate term with a payment that covers both your principal and interest.
In comparison, you have more loan options with a non-traditional mortgage. Here are some loan programs for you to consider:
- A balloon loan operates on a lump-sum payment schedule, so you’ll eventually pay off your entire loan in one payment at some point.
- An interest-only mortgage requires you to pay only interest for a certain number of years.
- Payment-option adjustable rate mortgage (ARM) loans allow the borrower to pick their terms and take the risk for higher interest rates in the future.
You’ll also have more options for the type of property you buy. You can get a non-traditional loan for most property types, from a single-family primary residence to a commercial property.
3. Down Payments
The days of no down payment are pretty much obsolete. In most situations, you need a 20% down payment for a traditional mortgage. One of the only ways to get around this is if you get a lower down payment requirement from a government-backed FHA loan or VA loan.
However, with alternative loans, you will often need to put down 40-50%. While this may seem like a lot, this creates more initial equity in your home and will also help lower your monthly mortgage payment.
4. Ideal for Shorter Term
Many people take on non-traditional loans for short-term projects. While a non-traditional loan can carry more risk than a conventional loan and cause the lender to offer less favorable terms, some borrowers only need a short time to pay their loan off quickly.
This is great for investors who need cash for investment properties. They can buy real estate, repair the property, and flip it to repay the loan.
5. Higher Loan Limits
You’re not going to get a high loan amount with a traditional mortgage if you don’t have the income to back it up. This is a problem if there is an expensive home you want to buy and you don’t have much time to take advantage of the deal.
Fortunately, the same loan limits do not apply to non-traditional home loans. A lender can work with you to create a deal that works for both of you or offer a jumbo loan for an expensive property. You’ll be able to purchase high-priced homes that you wouldn’t otherwise be able to.
6. Afford a Home Faster
One issue people face with traditional mortgages is that they need to wait to buy a home. Because of the strict requirements, people need to save money and maintain a stable job to afford their mortgage. This can draw out the process of becoming a homeowner.
A non-traditional home loan will help you afford a home more quickly. Many non-traditional loans are interest-only initially. Since you don’t pay any principal on your payment, your monthly mortgage payment will be less.
As a result, you’ll be able to buy a home sooner without worrying about making enough money for a higher monthly payment.
7. Accumulate Wealth Before Paying
Another benefit to consider when looking for other types of loans is that you don’t have to deal with higher monthly payments. You can defer your loan until the future, which means you’ll be able to use your money for other purposes, such as investing or starting a business. These actions can help you build wealth faster than putting all your cash into a property.
8. Potential to Defer or Only Pay Interest
If you already have several expenses taking up part of your budget, you probably don’t have enough cash flow to fund a new home. A non-traditional loan can help by letting you defer your loan until later.
An interest-only loan also helps in this situation. Since you don’t pay any principal on your loan, you’ll have a lower monthly payment. You can take care of other priorities until you’re ready to pay your loan.
This is also useful for people who currently have a home and need cash to avoid foreclosure or want to do a cash-out refinance. They can get the money they need today and worry about paying it off later when their finances stabilize.
Apply for Non-Traditional Home Loans Today
Non-traditional home loans are an excellent alternative for new homeowners who can’t get traditional loans and want more flexibility with their payment options. They allow you to get different payment loan terms, purchase more expensive properties, and make more investments.
Finding the right lender is critical to getting the best deal for your loan. At Associates Home Loan of Florida, we’ve helped countless people find the perfect loan for their needs.
If you’re interested in speaking with someone about a loan for your home purchase, apply now!