Alternatives for People Who Can’t Get a Mortgage

Most homeowners are buying their home on a mortgage. However, getting approved for a mortgage is not an easy task. If you find yourself stuck because you need to buy a house but you can’t get a mortgage for it even though you can actually afford it, you can choose from several alternatives below:


1. Borrowing from Your Whole Life Insurance Policy

If you have a whole life insurance policy, you’re lucky because you can borrow money from it. As you make your regular insurance premium payments on regular basis, you accumulate cash value, and you earn both dividends and interest. You can borrow money against your accumulated cash value. Because the accumulated cash value is actually your own whole life insurance policy, you don’t even need to pass any loan qualifications. However, borrowing money from your whole life insurance policy reduces the face value of it if you don’t pay back.

Before you actually borrowed money from your whole life insurance policy, make sure that the benefits that you will get from buying a property is more than the drawbacks of cashing in your whole life insurance policy.

2. Get a Seller Financing

You can try to get a seller financing to buy a home. When you get a seller financing, you don’t have to deal with the bank. You just need to make your payments directly to the person who sold the house to you. However, getting a seller financing is not easy because most homeowners do not own their house free and clear. People who do own their home free and clear mostly don’t want to become lenders because they don’t want to deal with the risks.

3. Getting a Rent to Own or Lease Option

With rent to own or lease option, you can rent a property for a certain length of term, and at the end of the term, you will have the option to buy it. The drawback of rent to own or lease option is that the rent payments are usually a bit higher than market price.

These alternatives are great options if you need to buy a home but you can’t get a mortgage. However, they have their own potential problems that you need to be aware of. Make sure that you know all the risks before you take one of them. It is a good idea to consult a financial advisor before you make any decision.