Purchasing real estate over the last few years has been anything but a piece of cake, to say the least. What was once a battle amongst very stiff competition has now turned into finding a creative way around rising home prices and increasing mortgage interest rates while navigating through a limited inventory of homes for sale.

If you are looking to purchase a home in Palm Springs right now it may seem like all the odds are against you for finding a home you will love. But there are some out-of-the-box strategies you can use to help you secure a Palm Springs home.

Two Current Creative Strategies Buyers are Using to Buy Homes

Lease Option

This type of purchasing strategy can sometimes be confused with owner financing but it is actually very different. It is an arrangement to rent a property with the option to buy in the near future while a portion of the rent is saved for a down payment in the purchase.

Before the contract for the property is final a homeowner and renter determine which party is responsible for maintenance and general upkeep of the property as well as repairs. In most lease options the costs are split.

The current property owner might require the tenant to pay an option fee between two and 7% of the value of the home to hold the option open to purchase the home. The current homeowner and renter hoping to purchase the home someday will agree on how long the lease on the home will last. At the end of this time, the renter must decide if they will move forward in purchasing the home.

Once the lease option agreement has been put into place the renter will pay slightly higher rent than the current fair market value for an agreed-upon number of years until the option to purchase the home. The homeowner will deposit this extra rent money into a special fund that will go toward the down payment on the property.

If the potential buyer who has stepped into a lease option agreement with hopes to someday buy the home at the end of the lease decides against purchasing the home and walks away from the property they will lose all of the option fee money and the extra funds put into the down payment account.

Owner financing

This option is also known as seller financing and a few other less-used terms. This allows a buyer to purchase a home by paying the current homeowner instead of picking out a traditional mortgage.

In this option, a buyer does not just take on the current homeowners' mortgage and begin making their payments without contacting the lending company. The homeowner's current mortgage lender is contacted to see if that is a viable option for the new buyer to take on ownership of the home. It's always within both home selling and home buying parties' best interest to contact the current homeowner's lender. If a lender finds out that the current mortgage holder has in a sense sold their home and someone else has assumed the mortgage payments they could be responsible for paying off the complete remaining balance of the mortgage right then or face foreclosure.

For owner financing to work the lender must be contacted and at this time the lender must determine if they will allow the new home buyer to assume the current mortgage on the home. This means that the lender will take all of the personal financial information from the potential buyer in the same manner as they would for originating a brand new loan. The lender will determine if the potential home buyer is able to assume the mortgage on the home. After the agreed-upon amount of time, the home buyer will also be responsible for paying the extra money to reach the fair market value of a home at the time of purchase.

Both of these can be creative ways to get into a Palm Springs home where buyers may not be able to take on today's current traditional home mortgage arrangements. For more information on purchasing Palm Springs real estate please contact us anytime.