Alternative Ways to Finance a Homestead???

[SpoonBread]

My husband and I have been looking and looking and we think we may have found the perfect homestead for us.
We are just trying to figure out how to finance it.
It's a small house (816sqft) on 5acs in the country. It's a HUD/FHA Foreclosure, and they are asking $27,500.

We have been diligent over the past 2 years and have saved up about $10,000 towards a house. How do we cover the other half?

A mortgage is out of the question as far as we can tell because Hubby is technically self employed but has been doing it for less than a year. (insufficient proof of income). and most banks we have looked at won't do a mortgage for under $50,000 anyways.

We thought about seeing if we could take out a personal loan for the rest if possible.

Has anyone else done this, or have any suggestions on how to buy a homestead without a mortgage?

Any help would be greatly appreciated. :)

[flatwater]

Talk to your lawyer if you have one , they usually know of people with money who might take a chance on you but the interest is a little higher. You have almost half down though , Keep checking with different banks. Realastate agents should be able to help you out also. Could you get a co-signer possibly? I wish you all the luck with it.
Flatwater

[Terri]

1. Try the small banks: they are WAAY more flexible than the chains! The ideal bank is local! We borrowed $26,000 on bare land from a local bank, when none of the big boys would touch us.

2. If you are living in a rented place, you might qualify for an HUD mortgage. You do not have to be poor to deal with the HUD!

3, Can you call your CC company and ask for a very low interest loan? Expect to have higher payments.

4. Ask a realtor, and do not tell them that you have a place already picked out. Realtors know a lot about where a body can go for a loan.

Good luck!!!!!!!!!!!

[WileyCoyote]

I wouldn't discount the larger banks; they sometimes have more access to different financing. I only say this because we went to the smaller banks and they dismissed us out of hand, but a big bank - altho they made us jump thru all kinds of hoops - got us the money. Smaller banks are usually not on the whole Home Loan Bank Federal program, that provides access to all sorts of different types of financng. Because of the age of the house, and our projected income status, we could not qualify for a standard loan.

A big plus in your favor is the amount down. We paid more than half down on our homestead.

Another big plus is if you have items that they can put a lien on if the loan goes bust. We had another piece of property (lesser value, smaller place) and two fairly new vehicles to tempt them.

Look for other resources as has been said - but don't discount anything. Sometimes the people you trust the least can come thru for you.

[SpoonBread]

Thank you everyone for all your advice. We will definatly try to keep our options open. Husband has an account with a large bank, and I have an account with a small/local bank so we can check either place :).
Neither of us have credit cards, and hopefully never will. We were surprised when we were turned down for the mortgage because we have a good income, decent down payment, and next to no debt (hubby has student loans).

We walked around the property Friday and were very excited. We got ahold of the listing agent today and we are scheduled to go see it Wed. evening then we will be able to actually get into the house and look around and see how much actual work there is to be done.

wish us luck! I will be sure to keep you all posted.

[QueenoftheFlock]

You said the place is currently being offered by FHA/HUD. I would think FHA would be willing to finance you? I know they try very hard to get people into houses and with the real estate situation being what it is, I would hope they would try with you guys. I also know that if you know of any real estate agents that specialize in HUD/FHA houses, they might have some good suggestions for you as well. Good luck to you! Hate to lose the perfect place because of no financing!

[Vidman]

If your heart is not set on this land try to find someone to owner finance just land. It aint the best way, but it is better than nothing. Then find a small portable sawmill dude to come to your land and cut your wood and build build build. Guys like me will usually work with you.

[JakeLeg]

Step 1: Go straight to a Mortgage Broker. Ask your real estate agent for one near you. A mortgage broker's job is to shop you around to get you a mortgage - it might be from out of state, government, etc and so on. They have vast databases of sources to pull from.

In our situation, since wife and I never use credit cards or loans (other than mortgage) we had a crappy credit rating. We had enough to put down about 15%. Talking to the broker and real estate agent, we decided to put down 10% and keep some cash on hand. The mortgage broker got us 2 loans. One was for 80% of the purchase price, and the other was for 10% of the purchase price (the final 10% was from us). In doing this, we avoided having to pay PMI since we weren't borrowing more than 80% from the main source.

Granted, we did have to pay him about 2500 buck, but he got us a very good rate for the time, and considering that our credit rating was WAY low, the 2500 bucks was a BARGAIN in light of the higher rates we would have paid without him.

I'm sure that a good broker will find you a loan from some source or other, even in the lower price range. Hell, around here, there are lots of 20,000 to 40,000 dollar houses, and there's no way people are paying cash for them, so the money's gotta come from somewhere.

[SpoonBread]

Thanks guys!
Yeah after tonight we've decided that we are really gonna have to get our financial ducks in a row before we look any further.

We went to look at the house and it was just about exactly what we've been looking for.
Unfortunatly, the "nice" listing agent forgot to tell us when we called to set the appointment, that Fannie mae is selling it through a closed bid/blind auction, closing tomorrow. And even if we bid full asking price we still may not get it. We don't want to rush into something we haven't been able to check out better so we are going to have to let this one pass us by. :(

But on the plus side it has pushed us to get serious or get out so to speak.

[Northern_bushrat]

Could you guys get any friends or family interested in buying a share?
Personally, I'd rather wait and save up all the money first...otherwise you'll be chained to having to make those payments, leaving you a lot less flexible as far as having to have a certain income. Could you guys find land without a house on it, would that be cheaper? If that's an option, if you could buy that outright, I'd go for it. Just get yourselves a walltent and stove, and rough it while you're building your own house. Build in segments, so that you're able to finish one part (room) in one building season and move in.
just keep looking and think outside the box...good things come to people who persevere ;)

[MYellowRose]

I don't know anything about you guys or where you live but if one or both of you are a military vet see if your state has a veterans land board like TX does. They would cover that amount with virtually no problem from what I've read.

[SpoonBread]

Thanks everyone for the advice.
With the way the economy and housing prices are going I think we are going to play the game of "wait and see". Also, we realized that things are too up in the air right now to be able to make a wise choice on where to buy a house. We are also worried about adding that mortgage mill stone around our necks right as all these banks seem to be going under.

I'm disappointed but I believe that it will all happen in due time. Until then we will save and prepare as best we can. And if things get really bad in the world, we can always pitch a tent on my dad's farm in Indiana. :)

[LeatherneckPA]

SpoonBread, perhaps an unwanted opinion here, but humor an old man for a minute. If Dad owns a farm in IN, why are you looking elsewhere?

When I was a kid we lived on a 130 acre farm in the beautiful Mohawk Valley of Central New York State. I had always had my eye on the 30 acre parcel of that which was on the other side of the road. On the other hand, I was full of "piss and vinegar", determined to "make my own way in the world", and generally do better than just be a farmer. I couldn't wait to get the dust of that place off my shoes. Funny thing is, now I'm 50 years old and supposedly wiser, and all I dream of is getting back to what I already had as a kid. And I could have bought what I wanted from my father for a "very reasonable" price. So what's my point?

Well, have you considered talking to your father about buying a parcel off him, or maybe building on the "back 40" and working for a share? It sounds to me like your homestead is already there and waiting for you. Unfortunately, in the last place you are looking.

Many of us of the homesteader mentality believe this country (and perhaps civilization as a whole) is going to hell in a hand basket. Whether you choose to believe it's because we have turned our back on God or not is something only you know. But even mainstream media is waking up to the fact that the demise of traditional family values is a major causative factor.

Maybe being able to travel thousands of miles a day at the drop of a hat is not really such great progress? Maybe having "immediate" family living in five different states isn't really progress. Are daily e-mails, monthly phone calls, annual reunions, or funeral visits really maintaining family ties and improving our standard of living?

Personally, I don't think so. But, I'm an old man. What do I know?

Perhaps we should be looking for ways to reverse that trend; by moving closer to our families, by working together as families used to do to prosper, by recognizing that family is truly the one constant source of support in our lives. And if that's not true, then perhaps we should be making the first effort to reach out to those we have lost touch with.

Just rambling opinion of an old man who hopes one day to share a homestead with his own DD and DGS. (and maybe even a brother or two?)

[sharp_shepherd]

I really applaud you LeatherneckPA. Your beliefs are similar to my wife and the rest of the family. Nearly all of our families live within 20 miles. The only missing link is my sister's husband and kids. I was doing very well financial wise living farther away but was unhappy and missed my whole family so i told my wife and she felt the same way. We sold my small business and the assets paid off the loans and purchased a home. We were able to see my grandfathers last few years of life which i know meant so much to him. We were always a close family and now we are even closer. I totally agree that money doesn't buy happiness though i would like to buy a nice piece of land and have the family build a home there. We are now looking into this manner and it will hopefully happen before TSHTF.

[huckelberry]

i have used owner financeing in the past you have high interest rates,but if ya double up on payments....it dont take long.another option i have used is private money again higher interest rates but managable...huck