Finding A Home
What is the difference between a "real estate agent" and a "real estate broker"?
Great question, get it all the time. Very simply, the biggest difference is if you want to open your own real estate company, you have to have a broker's license. Other than that, that's the huge difference.
Do I need a realtor in order to buy a house?
When getting started in real estate, there is no law that says you need a realtor to purchase a home. However, to seek out the guidance and counsel of a professional realtor that has dedicated their life to learning this business in and out probably would be a good use of your time. Now, getting the right fit is a different story, because obviously like in any business, realtors come in any conceivable variety with personality, so, if you can find someone you sync up with, I would highly recommend using them. Of course I'm biased with realtors in all this, but overall I would highly recommend seeking out the guidance of a good realtor.
How does a realtor get paid?
The realtors are paid from the seller. The seller agrees, early on when they'r listing their home, to part with a certain percentage of the home's value, the sale price. That is, in my state, anywhere from 5-6%, although it could vary around the country. That 5% or 6% is then divided up, usually 50-50, half going to the listing agent and the other half going to the selling agent. It is possible that that person can be the same person, but you dont' know that going in.
How do I know whether my realtor is doing a good job?
When getting started in real estate, I always rely on instinct when knowing if my realtor is doing a good job; in other words, you will know if you feel like you're being well serviced. Most consumers have a high expectation for the opportunity they are giving a realtor, or anyone for that matter; and at the end of the day you're not feeling like you're in the loop, like you're up to speed, like the agent is adding value, you probably will know if your realtor is doing a good job sooner rather than later.
Can I "fire" my realtor?
With regards to getting started in real estate, firing your realtor depends on the listing side; you do have an agreement which has a beginning and an end. Now, unless something is written in there like some sort of a clause that the seller may fire the agent at any time, the seller might have to work with that agent up until the agreed upon time. Now, on the other side of the coin is the buyer; buyers rarely sign any kind of an agreement with a selling agent, so up until the point where they are in escrow, if a buyer working with an agent is not happy with that agent, the buyer will most likely have the ability to fire the realtor and part ways.
What does "location, location, location" really mean?
With regards to “location, location, location”, when it comes to real estate, houses may come and go, neighborhoods may change; but the only thing that is finite and limited is the ground underneath us, the land. As the saying goes, "They aren't making any more of it”. So, if you have a good location, it will be a good location for a good long time. This is the cliché, "location, location, location".
Do I need to check with local police about the neighborhood history?
I would absolutely encourage any buyer to go check with any local municipality to find out whatever they are curious about about the area, for a host of reasons. First of all, I want everyone to have a happy and healthy experience. I want them to just live on and just enjoy the neighborhood. I want them to have wonderful thoughts and memories of me putting them into this property. I would take it a step further. I would talk to neighbors. I am instrumental, often: I've knocked on many a door and talked to people about neighborhoods. So yes, I am a big fan of diligence when it comes to finding out about a local community.
How long will it take to find a new home?
This is contingent on many, many different factors. It's a function of seasonality, of inventory, or personal preference. I've worked with every conceivable type of buyer. Some are flexible and some are very rigid. So, I wish I had a universal answer to that question, but it's more complicated than you could ever imagine.
What should I look for during an open house or showing?
There are many things you should be looking for during an open house or showing, but just in a brief list: Probably you would like to know how long has the property been on the market, what is their motivation for selling, and how does it compare in terms of value to the other homes that are on the market competing against it.
How do I decide which home is the best choice for me?
When getting started in real estate, I think when deciding which home is the best home for you, it all starts with determining what your price comfort zone is. Again, get to the lender, find out what price range you should be looking at, and then the answers usually present themselves. Some people like vintage cottages and don't care about a three to five year deferred maintenance on the property. Other people just want brand new construction and they'd rather end up on maybe a condominium, three on a lot, two on a lot, something like that.
I have found a new home to buy; what is the first thing I need to do?
When finding a new home to buy, the first thing to do upon identifying the property that has really piqued your interest is a matter of talking to your realtor and saying “OK, I feel this might be the one. Let's dig in.” At that time, you want to check to see if there are any offers on the property and what their motivation is. You want to start determining what you think the value of the property is. Then you start putting all these things together in a synergistic manner. If, after all this gathering of information you still feel that it's time to move ahead, then you're on to making that offer for that house
Showing posts with label Buying Real Estate. Show all posts
Showing posts with label Buying Real Estate. Show all posts
Wednesday, July 30, 2008
How To Be A Smart Buyer At An Open House
How to be a smart buyer at an open house: Open houses can be a home buyer's best friend, saving you time and energy. VideoJug presents some tips on getting the most out of an open house by being a smart buyer.
Step 1:
Case The Joint
Open houses are a terrific way to research a neighborhood- its amenities, its prices, and its atmosphere. Carve out a few hours one day and hit as many open houses as you can in the neighborhood you're looking at. You'll come away armed with information and with a strong sense of what your money can buy.
Step 2:
Deal With The Agent
If you don't yet have a real estate agent or buyer's broker, attending open houses is a great way to find one. Here you can see agents in their element. You'll be able to see who's a hard worker, who you click with… and who's sleeping on the job. If you do have an agent, sign in using his or her name to avoid confusion for the agent who's showing the house.
Step 3:
Mind Your Manners
We know it's hard to keep a straight face when confronted with some décor decisions, but do keep your lips zipped. The owner might be present, and may not be so keen to accept your offer once he's heard your opinion of his hand towels. It's also considered impolite to manhandle the personal possessions, or track rain or mud inside.
Step 4:
Take Your Time
Walk around at your own pace. Check out the fixtures and cabinetry. Turn on the water to check the pressure and water heater. If the owner's there, ask questions and chat about the neighborhood.
Step 5:
Scope Out The Neighbors
If you're interested in a property, walk around it and see what you can observe. Are there many cars parked in a driveway, signaling a crowded house? Is their yard kept up? If you get serious about the house, ask the owners how the neighbors are.
Step 6:
Don't Jump Into An Offer
Real estate columnist Ilyce Glink suggests resisting the temptation to make an offer at an open house. If you think this is the house for you, make an appointment to see it again- and don't tell the agent how serious you are. Under circumstances where there is a lot of serious interest in the house and you feel that you need to move fast, take a break, go for a coffee or a walk outside, and return with a cool head.
Step 7:
Go Back
Realtors suggest making notes about each open house you go to- they will start to blend together after awhile- and returning to the ones that seem like a viable purchase. A recent article in the Boston Globe points out that open houses are usually held on weekends in the middle of the day—showing a house at its Sunday best. It's important to see a property at a different time, since a street that's quiet on the weekends might be on a bus route during the week, and a room that's full of light in the morning might be dungeon in the afternoon.
Top Five Reasons Home Inspections Fail
Trying to sell your home? Before you go too far down the road, check out what home inspectors say are the most common problems that might end up killing the sale.
Step 1:
Plumbing Issues
If you talk with home inspectors, they’ll mostly often tell you that plumbing issues are what come up most during a home inspection. The most obvious thing to look for is any kind of leaking around any exposed pipes.
Step 2:
Fixing Plumbing Issues
This is something that you can do yourself;
check out every faucet for leaks especially the laundry connection for your washing machine, which is a common problem area. Also if your home is built in the 70’s or 80’s, you may have PolyButyline pipe. PolyButyline has been proven to fail, and is a definite red flag in every home inspection.
Step 3:
Electrical Outlets
Electrical concerns are also at the top of the list. Again, let’s start with the obvious. Home inspectors will find a lot of outlets that are loose or that don’t work, and the new owners will want these repaired.
Step 4:
Plugs and Sockets
In addition, inspectors will point out if key plugs are not GFCI circuits. Ground Volt Interrupters are a type of plug that basically shuts down when a surge is occurring. And with most homes, they are now a requirement for most rooms such as the kitchen, all bathrooms, and any outdoor sockets.
Step 5:
Breaker Boxes
Home inspectors say they also find many homes with improperly wired breaker boxes with breakers that are not the right size or do not fit.
This is a real concern in older homes that may not have been updated. With all the new demands for power; computers, televisions, appliances, you have to make sure an older electrical box has enough capacity to handle it.
Remember, more than 40,000 fires a year are caused by faulty electrical systems. So the new buyer will want to make sure there are no hidden dangers.
Step 6:
Heating System
Home inspectors say they also find many problems in the heating system.
Most home owners think that all they need to do is change the filter every few months. Potential buyers may want to see if you’ve done annual maintenance, such as where a professional has done a burner adjustment to make sure it’s burning properly, and has checked the unit for structural integrity.
Any leak in the piping or the unit could result in a dangerous gas leak or even carbon monoxide poisoning.
This is a critical inspection point for home inspectors.
Step 7:
Roofing And The Attic
Problems on the roof and the attic also routinely turn up in a home inspection report.
On average it costs more than 1,000 dollars a year to heat and cool a house. Many home owners don’t even know it, but they may not even have enough insulation in their attics leading to high energy bills as their heating systems works harder to maintain a consistent temperature.
Insulation requirements are different throughout the country, so the easiest thing to do is to go online and do a search for insulation calculators. On your roof, besides torn and cracked shingles, inspectors also say there has been flashing that has not been properly installed allowing water to seep into the house.
Step 8:
Drainage
And rounding up the top 5 is drainage.
Home inspectors also find many issues related to improper drainage. If the grating around your house doesn’t carry water away it will likely cool against the foundation and possibly seep in, in areas just like this. If you’ve got water in your basement, any water in your basement, it will likely kill the deal.
Also, home inspectors say that they find many gutter systems that don’t carry water far away enough from the house. That means, it might flow right under your homes foundation, causing the problems that gutters are meant to prevent.
In many parts of the country mold is a big problem associated with moisture in the house. Mold is a health issue and it must be dealt with. Getting your home ready to sell involves more than a thorough clean. By checking out these things ahead of time, you’re going to head off some surprises that may come up in the middle of the deal.
Closing On Your Property
Closing On Your Property
What is a "closing date" in a real estate purchase?
A closing date is the projected target date of when the ownership will transfer. In my experience, this is truly a target date, as there are several factors beyond anyone's control such as banks, county assessor's offices, title insurance companies and so forth and so on. But to answer the question, that is the date where ownership will transfer.
How long does it take to close on a real estate transaction?
When buying a home, when it comes to closing in on a real estate transaction, in my experience, the vast majority of escrow periods are anywhere from 3 to 45 days. It takes at least 17 to 21 days to process the loan, because that involves compiling the file, having the appraisal performed and getting it off to the underwriter. Then, in turn issuing what's called loan documents, which need to be signed and then returned to the lender. Again, that's about 21 days, along with all the other logistics involved with a purchase, such as the home inspection, city reports, and review of disclosures. Therefore, basically 3 days is probably a comforting period of time that you can accomplish your real estate transaction in.
What is the best time of the month to close on a home purchase?
When buying a home, the best time of month to close in on a home purchase assuming and providing that there is a loan associated with the transaction, is probably to close more towards the end of the month. The reason behind this is that your lender is going to charge you interest from the date they release the funds to you, to the end of the month. If that can end up being fewer days than more days, then it will be a good thing to close a home purchase transaction later on in the month.
What are "real estate closing costs" and "title fees"?
When it comes to buying a home, real estates “closing costs” and “title fees” are a function of their lenders' agreement, so it's probably a better question for the lender, and that would be negotiated and agreed upon early. In other words; are we paying points on the loan, no points, what's the percentage rate, what's the incentive on the loan, what is the title insurance company? Therefore, again both “closing costs” and “title fees” are definitely lender questions.
Can the closing date on a real estate purchase be extended?
When it comes to buying a home, the closing date on a real estate purchase can be extended and in my experience we have extended quite a few escrow closing dates. There's a host of reasons that could surface to cause either side to want to extend their escrow. It has to be in writing and agreed by both sides. Some examples could be, maybe the sellers' place that they are heading off to is not ready yet and they have nowhere to go, therefore may ask for an extension of a few days. Now, one thing that can happen is what is called a sale leaseback where you actually close escrow, the seller stays in the property for a short period of time, often times compensating the buyer, basically paying their principal, interest, taxes and insurance for every day that they are in that property.
What happens at the closing of a real estate purchase?
When buying a home, what happens at the closing of a real estate purchase varies by region. In certain parts of the country, the closing of a real estate is a very formal ceremony, for lack of a better term, where everyone; the buyer, seller, the two agents, attorneys, and title reps are in the same room and it really is quite formal. In other states like mine, the closing of a real estate is a very passive-aggressive sort of event in that you're basically sitting back and waiting for confirmation from the county that the deed has been recorded. So, the closing of real estate purchases varies by region, again, going from very formal to very informal.
What can I do if the seller backs out of selling me their home?
If the seller backs out when buying your home, as the saying goes, for reasons beyond his or her legal right, in others words, you are within the safe, healthy confines of an agreement and they decide not to perform, then you do have the option to sue for what is called specific performance, which basically means do what you agreed in writing to do.
What can the seller do if I want to back out of buying their home?
The buyer has several means to legally cancel the escrot. But, once that date has come and gone, if the buyer chose to reneg their deposit could and would be in jeopardy and this is called liquidated damages. Compensating the seller for the damages he or she incurred by the buyer locking the property up and then walking away.
What is a "closing date" in a real estate purchase?
A closing date is the projected target date of when the ownership will transfer. In my experience, this is truly a target date, as there are several factors beyond anyone's control such as banks, county assessor's offices, title insurance companies and so forth and so on. But to answer the question, that is the date where ownership will transfer.
How long does it take to close on a real estate transaction?
When buying a home, when it comes to closing in on a real estate transaction, in my experience, the vast majority of escrow periods are anywhere from 3 to 45 days. It takes at least 17 to 21 days to process the loan, because that involves compiling the file, having the appraisal performed and getting it off to the underwriter. Then, in turn issuing what's called loan documents, which need to be signed and then returned to the lender. Again, that's about 21 days, along with all the other logistics involved with a purchase, such as the home inspection, city reports, and review of disclosures. Therefore, basically 3 days is probably a comforting period of time that you can accomplish your real estate transaction in.
What is the best time of the month to close on a home purchase?
When buying a home, the best time of month to close in on a home purchase assuming and providing that there is a loan associated with the transaction, is probably to close more towards the end of the month. The reason behind this is that your lender is going to charge you interest from the date they release the funds to you, to the end of the month. If that can end up being fewer days than more days, then it will be a good thing to close a home purchase transaction later on in the month.
What are "real estate closing costs" and "title fees"?
When it comes to buying a home, real estates “closing costs” and “title fees” are a function of their lenders' agreement, so it's probably a better question for the lender, and that would be negotiated and agreed upon early. In other words; are we paying points on the loan, no points, what's the percentage rate, what's the incentive on the loan, what is the title insurance company? Therefore, again both “closing costs” and “title fees” are definitely lender questions.
Can the closing date on a real estate purchase be extended?
When it comes to buying a home, the closing date on a real estate purchase can be extended and in my experience we have extended quite a few escrow closing dates. There's a host of reasons that could surface to cause either side to want to extend their escrow. It has to be in writing and agreed by both sides. Some examples could be, maybe the sellers' place that they are heading off to is not ready yet and they have nowhere to go, therefore may ask for an extension of a few days. Now, one thing that can happen is what is called a sale leaseback where you actually close escrow, the seller stays in the property for a short period of time, often times compensating the buyer, basically paying their principal, interest, taxes and insurance for every day that they are in that property.
What happens at the closing of a real estate purchase?
When buying a home, what happens at the closing of a real estate purchase varies by region. In certain parts of the country, the closing of a real estate is a very formal ceremony, for lack of a better term, where everyone; the buyer, seller, the two agents, attorneys, and title reps are in the same room and it really is quite formal. In other states like mine, the closing of a real estate is a very passive-aggressive sort of event in that you're basically sitting back and waiting for confirmation from the county that the deed has been recorded. So, the closing of real estate purchases varies by region, again, going from very formal to very informal.
What can I do if the seller backs out of selling me their home?
If the seller backs out when buying your home, as the saying goes, for reasons beyond his or her legal right, in others words, you are within the safe, healthy confines of an agreement and they decide not to perform, then you do have the option to sue for what is called specific performance, which basically means do what you agreed in writing to do.
What can the seller do if I want to back out of buying their home?
The buyer has several means to legally cancel the escrot. But, once that date has come and gone, if the buyer chose to reneg their deposit could and would be in jeopardy and this is called liquidated damages. Compensating the seller for the damages he or she incurred by the buyer locking the property up and then walking away.
How To Buy A House Using A Lease Option
Rent-to-Own homes, also known as Lease Purchase Homes or Lease Option Homes, are a great way to buy a house if you are unable or unwilling to commit to a purchase. A lease option basically means you are leasing or renting a property with an option to buy with the future price of the property fixed at the time the option is signed.
The future buyer (or renter) pays the seller a negotiated up-front payment to purchase an option to buy the home at a fixed price after an agreed upon time, which is usually one year. During this time the buyer will often pay a monthly payment that is in excess of market value. This excess will usually be credited towards the down payment should the renter exercise the option to buy the home. In the event the renter decides not to purchase home, both the option money and any excess rental credits are forfeited to the seller. The renter can sell his option to buy to a third party.
This method of easing into home ownership is sort of a hybrid between buying and renting. It affords one time to decide if a house if right for them, time to fix any potential credit problems or work issues, and time to save for a down payment.
The seller is committed to sell the house at the agreed upon price, even if the house increases in value. However, should the value of the house decline, the renter has the option of backing out of the deal. He will, of course, forfeit his option and rental credit money, but he will not be forced to buy a house that he might no longer want to purchase.
To find properties that offer a lease to own option, talk to brokers and agents just as if you were looking for a regular home purchase. The homes that usually sell in this manner are the ones that have been on the market for quite some time, where the sellers are eager to explore any option to sell the properties. Before purchasing a lease to own option, have a real estate lawyer thoroughly examine the contract.
The future buyer (or renter) pays the seller a negotiated up-front payment to purchase an option to buy the home at a fixed price after an agreed upon time, which is usually one year. During this time the buyer will often pay a monthly payment that is in excess of market value. This excess will usually be credited towards the down payment should the renter exercise the option to buy the home. In the event the renter decides not to purchase home, both the option money and any excess rental credits are forfeited to the seller. The renter can sell his option to buy to a third party.
This method of easing into home ownership is sort of a hybrid between buying and renting. It affords one time to decide if a house if right for them, time to fix any potential credit problems or work issues, and time to save for a down payment.
The seller is committed to sell the house at the agreed upon price, even if the house increases in value. However, should the value of the house decline, the renter has the option of backing out of the deal. He will, of course, forfeit his option and rental credit money, but he will not be forced to buy a house that he might no longer want to purchase.
To find properties that offer a lease to own option, talk to brokers and agents just as if you were looking for a regular home purchase. The homes that usually sell in this manner are the ones that have been on the market for quite some time, where the sellers are eager to explore any option to sell the properties. Before purchasing a lease to own option, have a real estate lawyer thoroughly examine the contract.
Buying A Home: The Extra Costs
Buying A Home: The Extra Costs
What is a real estate "appraisal" and do I need one?
A real estate appraisal is quite simply an analysis of the property determining its value. This will be sent to an underwriter as part of the loan process. If it's an all cash deal, there is no loan appraisal necessary. The buyer may even want to do an appraisal to make him or herself feel better about the value, but primarily an appraisal is required by the lender.
Who pays for a real estate appraisal?
When it comes to appraisals, in any transaction there are certain expenses that are seller's expense and buyer's expense. The appraisal definitely falls under the buyer's expense. It is something that is paid for not through escrow, but on the spot when it is conducted. This is instrumental in getting the loan approved. In other words, this goes off to the loan committee, otherwise known as the underwriter, who will review the file, again, credit, income, savings, appraisal, other factors and either they give a thumbs up or a thumbs down with regards to the loan approval.
What are the up-front costs associated with buying a home?
There are several costs associated with the purchase of a home that a buyer would inherit. Some are paid on the spot, meaning as they happen. Others are paid at the end of escrow--at closing of escrow. Some of the up-front costs would be the physical inspection, which is usually conducted in the first 7-17 days, and a buyer would be paying that right on the spot. The appraisal is something that is usually conducted also within the first 17-21 days. That is something that the buyer would be paying for. The vast majority of expenses in a transaction do fall on the seller's side, at least in my experience and in my state. This is all detailed in a closing statement at the close of escrow, seller and buyer both receiving one.
Which real estate costs are the responsibility of the buyer?
A buyer can expect to incur several costs on the process of purchasing a home. Some of the costs that they'll be looking at up front include, but are not limited to as the saying goes, appraisal fee and a home inspection fee. Fees that they are going to be paying later in the closing, at the close of escrow, would be whatever points that are on the loan, whatever other fees the bank may be charging for the processing of the loan. The vast majority of expenses, the larger expenses, are on the seller's side, which is good news for buyers.
Which real estate costs are the responsibility of the seller?
The seller is incurring the brokerage fee, which is perhaps the largest segment of the expense. The seller in my state, for example, is responsible for paying a county transfer tax, on occasion, a city transfer tax, and in certain instances there could be a city report. There's also a termite inspection that is, in my experience, a seller's responsibility. There are title insurance policies for each party, a seller and a buyer, so the seller has his own. So the vast majority of expenses on a transaction are on the seller's side, but at the same time, the seller is getting probably the lion's share of the procedes from the transaction.
What is the typical real estate commission?
I don't know if there is a typical real estate commission, but in my experience, in my state, it's usually in the five to six percent range. Again, that is the amount the seller is parting with on the sale, that five or six percent is oftentimes split 50/50 between a listing agent and a selling agent.
What are "real estate closing costs" and "title fees"?
When it comes to buying a home, real estates “closing costs” and “title fees” are a function of their lenders' agreement, so it's probably a better question for the lender, and that would be negotiated and agreed upon early. In other words; are we paying points on the loan, no points, what's the percentage rate, what's the incentive on the loan, what is the title insurance company? Therefore, again both “closing costs” and “title fees” are definitely lender questions.
What is a real estate "appraisal" and do I need one?
A real estate appraisal is quite simply an analysis of the property determining its value. This will be sent to an underwriter as part of the loan process. If it's an all cash deal, there is no loan appraisal necessary. The buyer may even want to do an appraisal to make him or herself feel better about the value, but primarily an appraisal is required by the lender.
Who pays for a real estate appraisal?
When it comes to appraisals, in any transaction there are certain expenses that are seller's expense and buyer's expense. The appraisal definitely falls under the buyer's expense. It is something that is paid for not through escrow, but on the spot when it is conducted. This is instrumental in getting the loan approved. In other words, this goes off to the loan committee, otherwise known as the underwriter, who will review the file, again, credit, income, savings, appraisal, other factors and either they give a thumbs up or a thumbs down with regards to the loan approval.
What are the up-front costs associated with buying a home?
There are several costs associated with the purchase of a home that a buyer would inherit. Some are paid on the spot, meaning as they happen. Others are paid at the end of escrow--at closing of escrow. Some of the up-front costs would be the physical inspection, which is usually conducted in the first 7-17 days, and a buyer would be paying that right on the spot. The appraisal is something that is usually conducted also within the first 17-21 days. That is something that the buyer would be paying for. The vast majority of expenses in a transaction do fall on the seller's side, at least in my experience and in my state. This is all detailed in a closing statement at the close of escrow, seller and buyer both receiving one.
Which real estate costs are the responsibility of the buyer?
A buyer can expect to incur several costs on the process of purchasing a home. Some of the costs that they'll be looking at up front include, but are not limited to as the saying goes, appraisal fee and a home inspection fee. Fees that they are going to be paying later in the closing, at the close of escrow, would be whatever points that are on the loan, whatever other fees the bank may be charging for the processing of the loan. The vast majority of expenses, the larger expenses, are on the seller's side, which is good news for buyers.
Which real estate costs are the responsibility of the seller?
The seller is incurring the brokerage fee, which is perhaps the largest segment of the expense. The seller in my state, for example, is responsible for paying a county transfer tax, on occasion, a city transfer tax, and in certain instances there could be a city report. There's also a termite inspection that is, in my experience, a seller's responsibility. There are title insurance policies for each party, a seller and a buyer, so the seller has his own. So the vast majority of expenses on a transaction are on the seller's side, but at the same time, the seller is getting probably the lion's share of the procedes from the transaction.
What is the typical real estate commission?
I don't know if there is a typical real estate commission, but in my experience, in my state, it's usually in the five to six percent range. Again, that is the amount the seller is parting with on the sale, that five or six percent is oftentimes split 50/50 between a listing agent and a selling agent.
What are "real estate closing costs" and "title fees"?
When it comes to buying a home, real estates “closing costs” and “title fees” are a function of their lenders' agreement, so it's probably a better question for the lender, and that would be negotiated and agreed upon early. In other words; are we paying points on the loan, no points, what's the percentage rate, what's the incentive on the loan, what is the title insurance company? Therefore, again both “closing costs” and “title fees” are definitely lender questions.
How To Buy A Home With No Money Down
uy a home with NO money down? Really? Yes, it actually can be done…we will show you how some folks do it. Of course, those are the ones who like living on the edge, one accident away from bankruptcy.
You Will Need
* A good credit history
* At least three years of stable employment
* A healthy appetite for stress
Step 1:
Credit Check
Missed car payments, late fees from your credit card company, and that medical bill that went into collection never seemed to bother you before. You could check your credit for free online to make sure it's good enough to get a mortgage. You can check your credit history on www.AnnualCreditReport.com once a year for free. And, if your history needs some help, there are some services out there who specialize in helping fix bad credit histories. A quick internet search will give you scores of them.
Step 2:
Go For Broker
Call a mortgage broker who deals with many lenders. These real estate finance finaglers can manipulate the numbers way better than you can. They've got lots of "zero down" options. Sure, these guys typically get paid by the lenders, so if they happen slip in some extra fees - who cares! It's just another cost you get to add to your already swollen monthly payment.
Step 3:
Ask Uncle Sam
Federal, state, and local government programs exist to help people get into home without a down payment- if you qualify. The largest government programs include those backed by the Department of Veterans Affairs (known as VA loans), the U.S. Department of Agriculture (or USDA), and the Federal Housing Administration (of FHA). So, if you're a US veteran or spouse of one, check out the VA loans. If you're buying a house in a rural community, look into USDA loans. And if you have good ordinary income and credit, then research FHA loans as they are the easiest to secure.
Step 4:
Down Payment Assistance Programs
DPAP's, or down payment assistance programs are non-profit and for low-income borrowers.
Ask your realtor for help tracking some of these programs down.
Step 5:
Piggy Back Loans
Instead of one mortgage, try two. With a "piggy back loan," you can pay for the house and get a home equity line of credit to cover the down-payment and closing costs you never paid for!
Step 6:
Private Mortgage Insurance
Now you might be asking yourself, isn't this risky? Not if you get Private Mortgage Insurance, or PMI! Your lenders will be lulled into a false sense of security with your zero down plans. And if you default- the lender is covered by insurance. PMI might cost more, but that just means you get more bills each month, and that means you are really popular, right?
Typically, the premiums are $45 - $65 per $100,000 borrowed.
Step 7:
Creative Solutions
Still can't find the down payment? Well, try asking the seller for help. You'd be surprised how accommodating some sellers are to make the sale. Some will take a promissory note from you in the amount of the down-payment to the mortgage company. Of course, you are still in the red up to ears, but it is another idea.
Talk to Mom and Dad and see if they can't give you the down payment and take it out of your inheritance. Take an extra job.
Or, why not wait a few years? If not, look for a less expensive property where you can afford the down payment or wait until the off season (Nov - Dec, & July - Aug) to look for houses, when the prices might be better.
Step 8:
Cover Your Butt
Insure yourself for disability, medical, home, earthquake, liability. It'll make the lenders love you more. You'll pay tons every month, but at least you didn't punk out like those other fools that actually put cash down up-front.
There are ways to get a home with no money down, but they are VERY risky. One misstep, one mistake, one accident, and you could end up sleeping on a nice comfy cardboard bed under the overpass.
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