Alternative Options in the Mortgage Market

by Justin Weinger on September 7, 2012

Home ownership has long been a cornerstone of the typical western ideal of a prosperous and happy life. Yet since the economic crisis that began back in 2007, options for getting access to mortgage finance have been reduced. Lending criteria has been tightened, while the wider economic impact on jobs and earnings has made life more difficult for those looking to get on the property ladder.

The prospect of owning a home remains a major life aim for 84 per cent of 18 to 34-year-olds, according to research from US lender TD Bank, but obtaining the requisite funding is beyond many working Americans. There are, however, other avenues to homeownership that some may not be aware of…

Government assistance

It is in the government’s interests to get as many people into home ownership as it can; it reduces the financial burden on the state, and is a good indicator of the overall prosperity and financial health of the country. There are a range of state-sponsored homeownership schemes – especially for those in jobs considered to be of high value to the local community – in which prospective buyers get a subsidized loan to help obtain credit in the normal fashion, or get a reduction on the list price of the property.

Mortgage brokers

More than half of all the loans for real estate in the US come via brokerages, which act as middlemen for the range of lenders out there. Some deals are specific to brokers, and it is a good way to get expert advice and find the best product for your particular circumstances.

Shared ownership

Shared ownership mortgages are becoming an increasingly popular way to get on the housing ladder. This is certainly the case in the UK, where such as Leeds Building Society are using them to address the lending crisis.

With these products, the buyer acquires a large majority share of the property, with the remainder being taken on by a housing association. With the third party putting in equity, the deposit required from the buyer – one of the major stumbling blocks in securing mortgage loans in the current climate – is reduced. Most of these deals see the housing association receive its share back when the property is sold, but there are options for the individual to buy the property outright at a later date.

Credit unions

Credit unions are able to offer competitive lending rates and terms because they are not subject to federal taxation. These groups are definitely worth consideration if you’re looking for a low-cost mortgage, but the downside is that these carry strict criteria over who is eligible.



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