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Two Ways To Buy A Luxury Home When You'Re Short On Cash

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Many people dream of living in a beautiful luxury home, but sometimes they don't have all the cash needed to make the purchase at that time. While the best course of action would be to wait, sometimes you're presented with a rare deal that you must jump on or lose forever. Here are two things you can do to buy a luxury home even though you may be short on funds at the time you need to make the purchase.

Negotiate Partial Seller Financing

Depending on your finances and credit, you may be asked to put up to 30 percent down on the home to secure financing. Since the average cost of a luxury home is $1.79 million, coming up with $537,000 down payment fast could be a challenge. While you could sell off some assets or look into a few mortgage assistance programs, possibly the easiest option is to ask the seller to help finance a portion of the home.

The way this works is you would secure a conventional loan for the maximum amount you qualify for and then have the seller essentially underwrite the difference. For instance, if the home you want to purchase costs $1 million, but you can only qualify for a $700,000 bank loan, the seller would contract with you to pay the remaining $300,000 directly to him or her for an agreed upon amount of time.

Although this type of financing is unusual, the seller may be willing to go for it if he or she is having a hard time unloading the property. Be aware, though, that the seller may charge you a higher interest rate for the privilege and you will typically have to pay the entire balance within a short time (e.g. 5 years).

Borrow Against Other Assets

Another option for finding money to make up for a shortfall is to borrow against other assets you may have. For instance, you could take out a home equity line of credit on another property or use your stocks and investments as collateral for loan. Depending on the type of mortgage you're applying for, some lenders will pay the down payment and attach the amount to back end of the loan.

While this can be a quick and easy way to get the extra cash you need, be aware that new loans will affect your debt-to-income ratio. If the new loan pushes your DTI above 43 percent, you may be denied a mortgage because lenders will consider you too risky to approve.

For help with findingluxury single family homes that fit your needs and preferences, contact a real estate agent.