Denver's real estate market has made substantial gains in the last several years, which is great if you're already a homeowner. If you're entering the housing market, however, it can be hard to wrap your head around climbing home values, volatile rates, and sourcing the funds for your down payment. Tumultuous rates and inflation have forced many people to the sidelines. Consider these alternative home financing options and keep your dreams of home ownership alive.
Federal Housing Administration Loan
Known as an FHA loan for short, this program, through the US Department of Housing and Urban Development, allows you to borrow up to 95% of the home's value if you can't otherwise qualify for a conventional loan due to the hefty down payment. This loan comes with a higher interest rate and stricter guidelines regarding inspections, so you'll want to talk through the process with your lender and real estate professional to ensure it's the right fit for you.
Home Equity Line of Credit
If you already own a home, you can take advantage of the available equity in your home, using the home as collateral for the line of credit, allowing you to borrow money for the down payment on your next home or to consolidate higher-interest rate debt on other loans, like credit card debts. If you plan to sell the first home, that line of credit will be paid off using the proceeds from your sale.
Borrow From Your 401K
When you're considering home financing options, think about borrowing money from yourself. It may seem counterintuitive, but if it can help finance your dream home and keep you from paying private mortgage insurance, it's worth looking into. There are limits on how much you can take and when you have to pay it back, so be sure to ask the right questions when considering this option.
Colorado Housing and Finance Authority Programs
Like most states, Colorado offers several first-time homebuyer grants, loans, and down-payment assistance programs available for qualified buyers through the Colorado Housing and Finance Authority. Your favorite local lender is a good resource for more information and can help you determine if you will qualify and which program best suits your situation.
Family Gift
If you're looking to finance your home dreams, borrowing from a close friend or family member who is able - can save you from high-interest rates. If you go this route, it's essential to have a private mortgage contract in place to ensure there are no issues regarding repayment. This way, both the borrower and the private lender can feel protected and satisfied with the situation.
If you're looking for the perfect place to call home in Colorado but need creative financial solutions - it's all about finding the right fit for your situation. That's where your trusted REALTOR and lender come in. If you need a lender recommendation, we work with the best in the state and even the country, don't hesitate to reach out. We're here to walk you through all the options and help you determine the best path moving forward to accomplish your real estate and investment goals.
Recommended Reading
Reality of Real Estate Rates - August 2023 Denver Metro Market Report
Denver Broncos Game Day Sports Bar Favorites: Where To Watch
Socials