Cash Purchase

• The most obvious way to avoid a mortgage is to pay cash for a home. This requires a source of funding, such as an inheritance or extreme dedication and discipline to save money. Those who are purchasing a home for the second or third time may have enough equity in their existing property to fund much of the purchase price. The benefits of paying cash include saving money on interest in your mortgage, owning your home outright when you are done and having no required monthly payment toward a mortgage company.
  
  

Renting to Own

• Renting-to-own allows a potential buyer who needs some time to build up his or her credit to lease the property with the understanding that a future purchase will likely occur. Typically in a rent-to-own scenario, the property owner gives the renter a set period of time in which to make the purchase at a agreed-upon price, using whatever financing option desired. To lock in this price, most prospective buyers will pay a small down payment. During the lease period some of the monthly rental payment might be placed into a fund for a future down payment. When the time comes to make the purchase, the renter can choose conventional financing or another financing alternative.
  
  

Commercial Loans

• When a company is looking to buy land or a building, they can use a commercial loan for the purchase instead of a mortgage. These loans are offered to businesses based on a business credit rating or some other form of collateral outside of the property itself. This collateral could be stocks, bonds or non-real estate property. This provides a measure of protection from foreclosure for the business should they miss loan payments.
  
  

Borrowing Against Life Insurance

• If you have a whole life insurance policy that has gained sufficient cash value, you can borrow against that policy to finance the purchase of your home. Because this money is already yours, you will not need to qualify for the loan. One benefit of this borrowing option is the fact that you do not have a repayment schedule, so you can repay it as you wish over time. However, the loan amount lowers the face value of your policy, which means your beneficiaries will receive less from the policy if you pass away before you repay the loan. You can only borrow the available cash value of the policy, so you may need to have additional cash funds to purchase a home outright using this method.