Alternative home financing options have emerged for would-be home buyers that feel stuck between the excitement of buying a new home and the anxiety of selling their existing one.
One of the main reasons new financing choices have become more available is the popularity of online options. New startups are emerging all over the internet. And if we are being totally honest, more and more consumers could care less about who is loaning them money. That said, I am going to be careful about identifying specific websites. As a Realtor (and host of Tuned In Realtor), it is important that I provide good information rather than just ANY information.
So let’s go over some of the alternative home financing options. There are two companies I’ve had clients work with, so I’ll specifically mention them here.
Alternative Financing Options I’ve Worked With
Divvy Homes. Divvy partners with real estate agents working with potential home buyers who might not qualify for a traditional mortgage. When I spoke with Divvy, they emphasized that they allow clients to make an all-cash offer, then allow that client to rent their home from Divvy while they save for a down payment. There are restrictions on what kind of home you can buy. For instance, you can buy a townhome, but not if it’s a townhome condo. There are also price restrictions.
Ribbon. Ribbon also emphasized that working with them allows a Buyer to offer all-cash. In a sellers’ market, this is particularly advantageous. Ribbon doesn’t necessarily market itself to buyers who don’t qualify for a traditional mortgage. When I spoke with Ribbon, they emphasized they help buyers who are looking to concurrently sell their homes but are worried that they won’t sell in a short period of time. Ribbon buys those buyers a little more time without missing out on a home they want to purchase.
Options I Haven’t Worked With But Are Popular
These are companies I’ve heard of, but have no idea whether they have satisfied clients or not. Again, I don’t want to give out names of companies that may not make the grade. But I will describe what they do. If you want further information about one, you can email me or call me during Tuned In Realtor.
These are descriptions from the National Association of Realtors:
Company 1 uses data to help clients calculate the value of their current home, then gets the homeowner approved for one of their mortgages on a new home before they even list. This allows clients to make a competitive, non-contingent offer on another home. They also lend clients the down payment and money to fix up their old house using the equity they’ve gained. The cost to the client is a 1.25% convenience fee on the purchase of the new home. Sellers can still be represented by an agent of their choice.
Company 2 will make a cash offer without financing contingencies with the terms the agent negotiates on behalf of the buyer, then holds the home for the buyer while their mortgage is finalized, at which point they sell it to the buyer for the same price the company bought it for.
Company 3 is a company that works with a real estate agent to make an offer on the client’s current property, which, in turn, allows the client to make a strong offer on the home they want to buy. They can do this with no lending or home sale contingency on their current home. Once the offer is accepted, the company buys the current home so the cash is available to close on the new home. The real estate agent can list the client’s past home, and if it sells for more than the price the company was going to buy it for, they give the additional cash (minus selling costs and program fees) to the sellers.