Freedom Cooperative Association
Most Americans dream of owning their own homes,
but very few families are able to pay cash for them.
Many people who could not otherwise afford to a home
become homeowners with the help of various mortgage programs.
Once you have found the home you want to buy,
you must decide how to finance your dream.
There are many ways to buy a home
| FHA |
FHA is the Federal Housing Administration. It is part of the U.S. Department of Housing and Urban Development (HUD). FHA does not make direct loans to help people build or buy homes. FHA (HUD) insures the loan and pays the lender if the borrower defaults on the mortgage. Because the lender is protected by the FHA insurance, it can offer more liberal mortgage terms than the prospective homeowner might otherwise obtain. |
| VA | VA is the Veteran's Administration. The VA insurance programs were developed to provide Insurance benefits for veterans and servicemembers who may not be able to get insurance from private companies because of the extra risks involved in military service, or who have a service connected disability. Since this is a government program it operates much like FHA insurance. |
| Conventional | These are loans where the government is not involved. These loans are made directly by a bank, savings and loan association, mortgage company, credit union, or other lender. Generally, the borrower must have better credit, and have a greater capacity to meet the mortgage payments. Many of these loans do not require the buyer to live in the home as the FHA and VA do. |
| Cash | This is exactly what it says -- the Buyer has the cash to pay for the home. |
| Simple Assumption |
This is a situation where the buyer assumes the liability for any existing mortgages. The title "simple" indicates that the assumption does not have to be approved by the mortgage holder. Since most mortgages have a "due on sale" clause that requires the mortgage to be paid when the home is sold, there are not very many Simple Assumption opportunities. |
| Qualified Assumption |
This is a situation where the buyer assumes the liability for any existing mortgages. The title "qualified" indicates that the assumption must be approved by the mortgage holder. Since most mortgages have a "due on sale" clause that requires the mortgage to be paid when the home is sold, almost all assumption purchases are Qualified Assumptions. |
| Seller Finance |
This is a case where the Seller is willing to personally finance the buyer's purchase of the home. The terms and conditions are agreed upon by the Buyer and the Seller. The closing documents are prepared for the Buyer signature. The Buyer pays what cash is required, signs the necessary documents and takes possession of the home. |
| Owner Carry Back |
In this situation, the Buyer borrows as much as he, or she, can qualify for, pays what cash he, or she, has available for the purchase of the home, and the Seller agrees to hold a 2nd Trust Deed on the home. This means that the Buyer is paying the mortgage payments on the loan that was taken out to purchase the home and is also paying mortgage payments to the Seller. The Seller's contract usually runs for 5 to 10 years, whereas the loan will probably run for 30 years. |
| Exchange | This is a unique situation. It can be as simple as two people trading properties, or it can be an exchange of multiple properties owned by various people who each end up with what they are looking for. The more "legs" the more difficult the exchange. One potential benefit is the tax ramifications resulting from an exchange. Each person must evaluate the tax situation in light of their own status, but generally, great tax benefits can be achieved by properly structuring the exchange. |
| Lease | While this is a form of ownership it is usually not considered to be such. An individual who leases a property generally does so for on a temporary basis and for a specific time period. While some leases are for extended periods, such as 20 years or more, most are for much shorter terms. In some cases a portion of the lease payment may be applied toward the ultimate purchase of the property. This situation is referred to as a Lease with an Option to buy -- or simply a Lease Option. |
| Rent | Renting a place to live is usually confined to apartments. The people who own homes generally prefer to have a lease, with a specified amount of time, and more stringent requirements than merely renting. Renting can be a very temporary arrangement whereby the tenant pays on a "month to month" contract and can cancel with a 30 day notice. |
| Option | An option is created when a potential Buyer gives the Seller something of value to enable the Buyer to have the right to purchase the property at a set amount, or under a given set of terms and conditions. In order to actually buy the property the Buyer must "excercise" his option by completing the terms and conditions set forth in the Option Agreement. |
Freedom Cooperative Association offers
Special Programs to help the
Buyer purchase his, or her, dream home
Sweat Equity | Home Trade In
Use Freedom Credits
Build it yourself with a Kit
Save-Up through the Escrow Program
Open an Escrow Account for your Children or Grandchildren
Wildewoode Lumber | New Century Homes
National Gold | Fulton Land Design Company
Mayan Financial Services | Vagabond Recreation
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