Making a Mortgage Down Payment with a Title Loan to Purchase a Granbury Home
In the last few years, there have been many obstacles in purchasing a home in Granbury. A sellers market has impacted home buyers making a need for anyone looking to purchase a Granbury home to adjust their homebuying strategy. In some cases, a home buyer is looking for alternative ways to make a significant down payment to secure the best mortgage loan interest rate and avoid carrying private mortgage insurance.
Not everyone is able to come up with a sizable amount of payment on a home purchase. It is not uncommon for Granbury homebuyers to look for ways to be able to put down thousands of dollars upfront on the purchase of a home. Some potential Granbury homeowners have considered the option of using a title loan to make a down payment. Before doing this it is always good to know all you can about title loans and the potential risks of taking one out.
What is a title loan?
To consider the option of using a title loan for a down payment it is good to understand clearly what a title loan offers. A title loan is a short-term loan with a high interest in which the borrower puts their vehicle up as collateral to secure the loan. A title loan does not require the traditional credit checks that other loan types do making it an intriguing option for borrowers with lower credit scores.
To take out a title loan a borrower must present the car to the potential title loan lender as well as provide proof of sole ownership and a valid license. If the title loan is approved the borrower will give over the car title to the lender in exchange for cash with signed legal documentation and terms often set at 30 days. After the 30 days if the loan has been paid in full the borrower will receive the title to their vehicle.
The drawbacks of using a title loan
A title loan can seem promising and offer a way to access cash for the down payment on the purchase of a home with no need for a credit check that would jeopardize your mortgage application. A title loan seems helpful and simple enough but there are very high interest rates associated with them. Some can be as much as 300%. This can make repayment of the loan, especially in a short amount of time very challenging. The short amount of repayment time can also add to the difficulty of repaying the loan and the high risk of the borrower losing their car.
The Consumer Financial Protection Bureau has noted that borrowers should be cautious when using title loans. They have noted that many potential homebuyers who have utilized this down payment method have faced the loss of their car. And the good news is there are alternative methods to finding help with a home down payment.
Other down payment options
There are other options for potential Granbury homebuyers to find ways to make a down payment on a Granbury home purchase. There are many grants and first-time buyer assistance programs available in the state of Texas. There are also federally funded grants on a national level that may be available to help with down payment assistance. There are also ways to borrow money from friends and family within the legal parameters of special home loans that offer a safer alternative for making a down payment.
Additionally, you could also find a home loan that requires a lesser down payment. It would require caring private mortgage insurance but this is a safer alternative to taking out a high-interest loan that needs to be paid back in a short amount of time. If you are interested in purchasing a home in Granbury but are concerned about down payment requirements it is best to first talk over available options currently with an experienced local real estate agent who can help you find the right financial professional to talk over all your current options available for your personal financial situation.
If you are looking for a home in Granbury and need help exploring down payment options please contact me. I can help you discover current programs available and help you find different professionals to help you talk over all of your options so that you can make your best personal financial decisions in a home purchase. Contact me anytime for any Granbury real estate needs.