Expert: Eric Forster - 6/25/2009

Question
Besides buying a house on a mortgage, is there any other method of buying a home?

Answer
George,

There are 5 ways of financing the purchase of a home:

1. Bank financing (mortgage). The bank qualifies you for the loan, and then you make monthly payments on the loan to the bank, until it is paid off (usually 30 years).

2. Buyer's financing. In this case, the buyer pays cash for the property and no mortgages are needed.

3. Seller's financing (mortgage). Here the seller agrees to lend you the money to purchase his property, and you make the payments on the seller's mortgage to him.

4. Lease with an option to purchase. In this scenario you lease the property from the owner. The lease agreement specifies that you have the option to purchase the property and that if you ever exercise this option, a portion of the lease payments will be applied toward the down payment.

5. A mix of No. 1 and No. 3. As an example, you get a first mortgage from the bank for 70% of the purchase price, and a second mortgage from the seller for 20% of the price.

A good realtor can help you in putting any of these options into effect.

Best wishes,


Eric