For years home financing was a standard procedure. Apply for a mortgage, get a mortgage. However, thanks to the tumultuous real estate market of the past few years, things have changed for people trying to get a mortgage. As a result, home loans are a bit harder to get from a bank, but there are new places to get a home loan.
Peer-to-peer lending
There are peer lending companies online, such as LendingClub.com, that allow members to invest in each other. If you are looking to get a mortgage from a peer lending group, just set up a membership and fill out a loan application. The investors will review your anonymous application and ask questions about the loan and your financial stability before deciding if they will invest. One loan can be funded by hundreds of different investors and terms of the loan are organized through the peer lending company.
The bank of mom and dad
We are not telling you to ask your friends and family to buy you a home, you are asking them to provide you with a home loan. If you have a close relationship with someone you think would be willing and able to provide you with a home loan then go ahead and ask.
If they agree, you can file formally with a lawyer, consulting on legal paperwork, tax implications and what happens to the loan in the event of a death. An alternative and cheaper option is to use an online service, such as LendingKarma, which will help you document and track your loan. LendingKarma also has an extensive Loan Education Center, which aims to take some of the mystery and complexity out of loan agreements and the person-to-person lending process.
Loan auction websites
Another way to get a mortgage is to let banks compete for you. Auction websites, such as LendingTree.com and GetSmart.com, send you offers from several competing lenders after you fill out a loan application. The philosophy is since they are competing for your business they’ll give you their best rates.
Home loan homework
Before you get a mortgage, do your homework and find out what the average rates are in your area. You can visit HSH.com to compare rates, use a mortgage calculator and read the current news on home finance.
