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      The multiple listing data appearing on this website, or contained in reports produced therefrom, is owned and copyrighted by California Regional Multiple Listing Service, Inc. ("CRMLS") and is protected by all applicable copyright laws. Information provided is for viewer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties the viewer may be interested in purchasing. All listing data, including but not limited to square footage and lot size is believed to be accurate, but the listing Agent, listing Broker and CRMLS and its affiliates do not warrant or guarantee such accuracy. The viewer should independently verify the listed data prior to making any decisions based on such information by personal inspection and/or contacting a real estate professional.

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      Could You Benefit From Some Lesser Known Financing Options?

      Could You Benefit From Some Lesser Known Financing Options?

      Published 05/08/2024 | Posted by Arda Clark

      When people think of financing a home, what immediately comes to mind is getting a mortgage loan. For some people, this isn't an option, or would be difficult to achieve. Fortunately, there are options that don't involve loans or might make a loan easier to get, some of which you may not be aware of.

      One option is a rent-to-own agreement, which can come in two basic forms. It can be a lease option agreement or a lease-purchase agreement. Both allow a prospective buyer to lease a home for a period of time before purchasing it, with a portion of the rent going towards the purchase price, in exchange for a small upfront fee. But there are differences. With a lease option agreement, the tenant has an exclusive right to purchase the home at the end of the lease term, but may also decide not to, forfeiting that right. A lease-purchase agreement creates a legal obligation for the tenant to purchase the home at the end of the lease term. This may sound like it's strictly a negative, however, a lease-purchase agreement also locks the home price at the time the parties enter the agreement. Given that home prices tend to appreciate over time barring unexpected economic situations, this could mean your purchase price will be lower than market value. In most cases, you will still need a loan at the end of the lease term, but you will be accruing equity in the meantime and likely improving your credit score.

      Another option that might allow you to bypass the need for a loan entirely is a shared equity arrangement. A shared equity arrangement is relatively simple, but might require connections. It involves seeking out others, typically investors, to share both financial responsibility as well as equity for a home. This is an excellent option for those who cannot get a loan, but can be a significant disadvantage when it comes to sell the property, since you won't be getting nearly as much equity from your home's value appreciating over time.

      Photo by Resume Genius on Unsplash

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