Three Innovative Ways to Buy a Home in 2024
- Theresa Grant
- Dec 24, 2023
- 2 min read
Looking to buy a home in 2024? You’re not alone in navigating the twists and turns of the real estate market. Interest rates seem to be doing a dance, and home prices are playing hard to get in some areas while turning competitive in others. The good news? Here are some innovative ways to help you make your dream of homeownership a reality.
If you’ve been diligently saving for a down payment and closing costs, here’s a savvy way to maximize your hard-earned cash. Enter the rate buy-down, often known as a 2-1 Buy Down. This loan option is making a comeback in the real estate world, and it’s a game-changer.
Instead of asking the seller to chip in for your closing costs you can request that they buy down your interest rate. Here’s how it works: In the first year of homeownership, your mortgage payment will be 2% less than the prevailing market rate at the time of purchase. In the second year, it’s 1% below, and by the third year, you’ll be at the market rate when you bought the home.
What’s unique about this deal is that the seller must cover this contribution, setting it apart from a homebuyer buying down points. When you’re faced with fluctuating interest rates and a fiercely competitive market, this arrangement can help you stretch your budget and get into a home you love without breaking the bank.
If you’re a first-time homebuyer, the California Housing Finance Agency (CalHFA) has a nifty solution for you. The CalHFA loan, is often referred to as a “silent second” loan. With this option, you won’t have to make any payments on this loan until you refinance, sell your home, or pay it off entirely.
Here are the basic requirements: You need to be a first-time homebuyer and live in the property as your primary residence. You’ll also need to complete homebuyer education counseling and obtain a certificate of completion, plus there are some income limits to consider. This type of loan can replace part or all of your down payment, freeing up your cash for other important expenses. It’s like a financial win-win!
Here’s another option that’s making a comeback: assuming the seller’s existing home loan. During the pandemic, many homeowners took advantage of favorable loan rates to purchase or refinance their homes. Now, you might stumble upon a property for sale with an assumable rate clause. You’ll need to qualify for the existing loan, and there are some extra steps involved, but it could be well worth the effort. If the house aligns with your needs, and the loan is assumable, you could step right into that fantastic rate, potentially saving you a bundle in interest over the life of the loan.
Have questions about home loans? Consult with your mortgage broker of choice and set out a plan. You can be a homeowner in 2024!
This newspaper article originally published in the Alpine Mountaineer Newspaper on December 21, 2023. Reproduced with permission of the author, Theresa Grant. All rights reserved.
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