Dear Claire: How Can I Use Creative Financing to Buy a Home?

Discovering Innovative Routes to Achieve Your Dream Home, While Navigating Financing and Assistance Programs

How do we get creative with getting you a house? There are a few things we can do. First, let’s talk about first-time home buyers. You’re scraping together everything you can to be able to put a down payment on the house and you’re thinking, “How do I save enough and how can I come up with some ways of making my money go further?” There are several programs specific to the Portland Metro area, Oregon, and the county available to help.

First, there is a down payment and assistance loan. What you have to do is attend some classes through the Portland Housing Center, then find a bank where you will deposit your money every month and they will match it. If you agree to put in $100 a month, they’ll match it with $100 a month. That way you can double your money as you save for your down payment.

There’s also the Oregon Bond which matches your down payment in a different way. It is based on your income, and you have to be under a certain income threshold. The qualifications for Oregon Bond change sometimes and you also have to be in certain areas of the state. If you meet both of these qualifications, they’ll give you more money to be able to buy a house.

There’s also the FHA, the Federal Housing Authority, which has loan programs that don’t necessarily give you more for a down payment, but they’ll let you qualify at a higher debt to income ratio and provide mortgage insurance. That is a way you can finagle it so that you can qualify for more than you normally would with just a straight conventional loan.

For those of you who own property already, you may have to face a very different set of problems. You might not want to buy a place until you’ve sold your place, or if you want to sell, you may be worried about finding a new place. In both situations, there are programs that can bridge the gap. One option is you could get a home equity line of credit on your existing home to enable you to buy your new home. Once you have sold your home, you can put that additional money down on your new purchase. This depends on the lender; some will not allow you to do it, but a lot of them will.

There is also a program called a Bridge Loan. This is more of a specialty product, and you must qualify for both mortgages. A lot of people can’t do this, but if you can, it enables you to borrow against the equity you have in your existing home to purchase a new home. Then, when the home is sold, that goes to pay off the balance on the existing home.

Last, but not least, if you have a 401k you may be able to borrow against it. There are situations where this may work, especially for first-time homebuyers, however, it depends on your 401k and you’ll need to check with your administrator. If the administrator allows, you can borrow against your 401k to put a down payment towards your new home.

These are a just few ideas for you. If you have any questions or if your 2022 goal is to buy a home, reach out to me at (503) 998-4878 or email me at [email protected]. I can walk you through these options, figure out which one would be ideal for you, and then connect you with the right person to help get you started on the right path.

Take care.