Mar

25

What’s A House Buy Nowadays

Filed Under Getting A House Buy | Leave a Comment

In some areas of the country home values have dropped by as much as 22% (in isolated areas even more).

So as a buyer, how do I know if I’m getting a deal of a house buy or just paying retail?

First of all you need to establish what similar homes are selling for in the area which you are looking.  You may need to contact a realtor to look at solds (records of sold houses) in your area.  You will want to look for comps based upon the features and square footage of the house in question.  For instance if you are looking for a three bedroom, two bath bungalow with a two car garage and a finished basement then you will want to compare solds that are comparable to those features and see what the prices are for homes sold within the last six months.  Any older than that and you are looking at perhaps higher or lower values that don’t reflect the current prices available now.

Frankly, I would never trust a listing price.  For example a house next door to me sold for around 60K two months ago.  They did some repainting and installed some copper where thieves had removed it in the basement.  It is now listed for $167,000.  That is what the house was worth three years ago.  It’s now worth around 80K.  Even at that price it is no longer a house buy.

In some neighborhoods you can value houses by looking at what a fair market rent would be for the house.  So If a house would rent for $1000 then you might say that the P and I payment should not be over $1000.  That formula might work in an area where fifty to 65% of the homes are rental homes.  At today’s interest rates that may mean the house is worth around 120K.

If you want a house buy you should be shopping to find undervalued houses.  You could tell your Realtor that you are willing to buy a house with some fixin’ needed or that you are looking to purchase a short sale home.  That’s is a home that was almost foreclosed upon but was sold to an investor with a discounted mortgage.

Not all short sales are deals.  Back two or three years ago mortgage companies were too lenient on  appraisals and financed homes at much more than the mortgage would support. I have seen seventy thousand dollar homes with mortgages of 170,000 on them.
When the seller sells on a short sale the bank will certainly not discount down to 70K for the new buyer.  Who cares if the mortgage was discounted 50k if the house is still overpriced by fifty thousand.

Your best bet might be to hook up with an investor.  Tell them you want to get a house buy.  Tell them you want a house at least ten thousand below what it should sell for in this market and what kind of house you are looking for.  An investor will go out and find a deal for you and then tie it up so you can come in and purchase his option.  There is one thing that needs to be done to make this plan happen.  You need to be ready with your financing.  That means pre-approved with a commitment letter for the price range you are shopping in.

That’s how you get a house buy.

Mar

17

Downpayment Assistance For New Buyers

Filed Under First-Time Buyers | Leave a Comment

When you finally find the home of your dreams you certainly don’t want to loose it to another offer because you don’t have your financing lined up.

Buyers going in for the first time often don’t recognize the distinction between being pre-qualified and pre-approved. Mortgage lenders are notorious for saying anything to keep you from looking elsewhere for a mortgage. In that case bring pre-qualified is worth little more than the paper upon which it is written. All the broker has collected is preliminary information – certainly not enough for an underwriter to review.

Being pre-approved is what is necessary to actually succeed at getting an offer accepted. A pre-approval should be a written commitment to finance up to a certain point. When you accompany an offer with such a document the seller can take your offer seriously, and frankly, should only consider a contingency with a pre-approval letter. Nevertheless many in this climate will receive for consideration just about any offer.

I have found that non-contingent offers based on a cash offer are always the ones that get the best price point. Seller financing and private money loans can allow this to happen if the selling price is low enough. I this market, with so many foreclosures this is not uncommon.

A distressed property can be available for 65 cents on the dollar and with private money an investor can acquire properties with built-in equity (after a little fix-up).

For many buyers it’s the down payment that is the problem so here are some ideas you might consider to get the greenbacks required.

VA LOANS

Veterans who qualify can also obtain VA loans that require no down payment. Veterans and active duty military servicemen and servicewomen can get these loans if they can qualify. These types of loans are available to qualifying veterans and active duty military servicemen and servicewomen. VA loans feature:

  • Fixed, below market interest rates
  • Low fixed payments
  • No down payments

VA VENDEE LOANS

Sometimes a buyer can obtain a down payment free VA loan without being a veteran. This can happen on a foreclosed home that has a VA loan on it. This could be a great option even for investors. . The benefits of VA Vendee loans include:

  • Low closing costs
  • No down payments

FHA PLUS LOANS

FHA plus loans require financing of the down payment in the form of another loan granted alongside the mortgage loan. FHA plus loans are ideal for buyers who are experiencing some financial hardship but have demonstrated the ability to make a mortgage payment. The good points about FHA plus loans are:

  • Assisted down payments
  • Easy qualification requirements
  • Closing costs are financed

All of these programs only work for first time home buyers. They were created to give buyers who might otherwise be unable to qualify for other traditional loan programs an opportunity to buy a home. Home ownership is important to the economy so our government has made it much easier for people to achieve the dream of home ownership by creating these down payment assistance programs.

You should also know that the government has tried to stimulate first time home buyers to purchase by providing a one-time tax break of $7,500. This is only available this year so get busy.