First Time Home Buying Financing

[VanDiesel99 14]

Anybody have any good tips on first time home buying and good sources for cheap financing? Looking to take advantage of the fact that I am still a full time student and have never bought a house before. I have good credit and a lot of it, and its time I take advantage of it. It seems there are people from all walks of life in this business(frequenting this site) so I thought this would be one of the first places to get some good info.

Thanks in advance

[jgoral76 14]

Wow man congrats on taking the leap. First I stress don't bite off more then you can chew, remember the car insurance electric gas , gas in car all that stuff the mortgage co. dose'nt look at when they say oh you can afford 1500 a month you go cool. second , shop shop shop, rates and homes are there it's a buyers market. third, try to go the seller to give you as much as possible without losing the deal( washer dryer- fridge, homw warranty and most of all seller concessions) Forth, look for a realtor that you can get recommendations for, not the girl just out of real estate school. Inclosing make payments on time and good luck, if you need more advice call me I'm home... Bigger is'nt always better......jeff

[PressurePros 249]

Positively, no questions asked, silly if you don't, bring a lawyer to settlemet that knows real estate law. He will save you more than his fee in extra costs that are thrown in at settlement by refuting them.

[jbruno 14]

Michael, I applaude your foresight to purchase while still in school. To this day I regret not doing it while I attended school. I went to schoool in an area where house were very cheap and could have bought a house with a little help from Dad, and had roommates help pay the rent and bills. But that's all behind me.

My firt thing would be to look for a 2 family, or a house with an apt. that could bring in income. if you're in an area with out of state students, they will probably pay a decent amount of rent if they are going to live off campus. So don't settle for the "norm" if you plan on renting out a room or apt. even if it's not the best house in town, you will be able to build sweat equity by fixing it up. But blah blah blah,,,

Sonymae and fannyMae are good first time home buyer programs, and ther are also loans from the govt. that loan you tyhe mopney to do repairs it's called a 203k i think. (that's the one I used) remember these programs may have a slightly higher interest rate, but have less down payment and other benefits.

You are defenitley on the right track. call me if you need help with this stuff, I've went through it about 3 years ago

[Jim Carroll 14]

you can get an fha backed loan for 100% financing. my first condo all i put down was ernest money when I signed the contract.

[JFife 14]

Vandiesel:

Great tip from Ken. I'll remember that one.

IMO, the problem with the 100% finance is that it is almost impossible to ever build equity in the home, at least in less than five yrs minimum. If you use it as a rental, it might not be as bad of a deal. Heck, while you are thinking like that, you might as well consider interest-only. If you are a savvy investor and well represented, it can work out very well for you. NOT for everyone. I'd NEVER do it. I wouldn't be able to sleep at night.

Second, you may find you are not as "loanworthy" as you might think. Are you showing a good income for the last two years?? That is the one that always gets you being self-employeed.

Lastly, a conservative number would to not buy any house that is worth more than twice as much as your income. Income=50K, buy a house=100K. I believe a lender will lend you up to triple your income, so that is the extent of the risk they'll take. Good luck,

[mas3372 14]

Congrats on your adventure. I bought my first house at 21 and was very lucky to do so.

Get a laywer for closing is right. Money well spent.

Look for first time buyer options as you can usually catch a break.

Do NOT get a interest only mortgage if you plan on living their more than a few years, this will bite you in the ASS,

At all costs, try to lock in at a fixed rate if you plan on living their more than 5 years. If you only want a 2-4 year house before moving, you can save a lot of money wit a 3 -1 arm type mortgage. Rates are still fairly low despite recent increases that locking in at a fixed is worth it.

Shop for Ins. Try your auto carrier to do your house as well. I have a seperate agent for just home because it was cheaper, but not always the case.

Most people want a fixer upper for the first to save some money. Think this through. If you see things that need to be fixed then their are usually more things that you can't see that need to be fixed. If you are going to have a new mortgage and can't afford the work to fix it up, you will be miserable.

Shop around but don't be afraid to be impulsive. If you find the house you want in the area you want, be aggressive. You don't want to lose any you will regret.

Good luck

[JFife 14]

..AMEND my statement on interest-only to include what MAS just said....

[VanDiesel99 14]

Thanks thats all good advice. My master plan is to live in this house while I complete school, which will save me quite a bit in rent. I had also planned to rent out a room or two to help pay for it while I am still in school(although I do still work full time). I was going to look for a fixer upper because I am pretty skilled carpenter(been doing that since I was 16). Planned on fixing it up in spare time while I live there and maybe make some money later selling it. It all sounds good on paper, just need to find a house that will fit the bill.

[PressurePros 249]

I have debated buying property and pursuing it as income via flip or rental. I think our business lends itself well to this type of venture as many of us that experience winter have quite a few months of very slow time. My first house was a fixer upper and here is what I learned.

No matter what you think repairs will cost, double the figure. What looks like patch and repair often turns into tearing out drywall, finding rotting framing, termites, on going water issues etc. I budgeted $10k for my kitchen and after finding inadequate plumbing and electrical, tearing up and replacing walls and floors, a few upgrades on countertops and fixtures my figure approached $22k. It helps to have a background in carpentry. This is where another "must have" comes into play. Hire an experienced building inspector. Well worth the fee.

With the above mentioned surprises comes the hassle of crews running around for long periods of time. This dissaray when you are trying to live there is emotionally taxing. I spent a year living in a half constructed home and by the end I vowed to never to do it again. You live and learn.

Buy your property in an area that will warrant the cost of renovation. Buying a house for $100k in a neighborhood that goes for $130 may not be the bargain it appears to be.

When you negotiate the price, don't be emotionally attached. Have a willingness to walk away from the deal. Realtors are in business to sell homes, many times they will sway you into making a bad deal or offering too much money. Always make your first offer what you would think is ridiculously low. Accompany it with "good faith" down payment. My second home was selling for $228k. I offered $150k along with $5,000 good faith and a willingness to go to settlement right away. The owners had already bought another home and were very motivated. I got the house for $175. Fifty thousand below asking price. The day I moved in I had a nice cash equity to make loans for remodel.

The best thing you can do is to do what you are doing here. Research. Set yourself up with a good team of inspectors, RE agents and attornies. Listen to their advice. Use your skills in carpentry and be realistic as to what you can handle on your own while you are in school and trying to run a business. That's a pretty full plate no matter what your age or energy level.

[EnviroClean 15]

If you are a vet you can buy a house for $11.00 down!!!! Pride for serving your country and VA Home Loans are the only reasons military service isn't a total waste.

[DustinC 64]

4 years in the marine corps =no money down and great interest rate. its great to own a home, your are forced to invest and when it rains all your stuff stays dry

[geobet1 14]

Once you decide what you want, where you want it and what price you want, (the three W's) make the purchase contract contingent upon satisfactory out come of BOTH WDO (wood destroying organisms, i.e., termites) AND HOME INSPECTION. As a Realtor, I used to use a clause such as this for my buyers protection: Your Realtor, if you as a buyer, choose to hire one, (known as the buyer's agent) will help you with this. Or, your lawyer will guide you. In any case, a bonded title company can handle the closing, but, as mentioned, a lawyer specializing in real estate settlements is a good idea.

Buyer reserves the full right to recind, cancel and or modify the offer tendered to the seller(s), with full remitance of any depost or escrow funds, or any other such funds or monies obligated to and/or for the purchase of the property described in this contract, in the event the WDO inspection AND Home Inspection detect WDO intrustion, either active or dead and / or damage to the structure caused by such WDO intrusion or anyother damages, related or non-related, exceeding $_________ (fill in the amount).

Hope this helps.

[JBenson 14]

Find a good buyers agent that will fit your needs. They will treat you right knowing that more than likely you will buy and sell a few times thru your time and if they make a good experience for you, they bank on you calling them up again to help you out. Dont contact the agent selling the house because they just want to sell it to anybody, avoid the dual agent, where they represent you and the seller. As far as the Financing, my point of veiw is if the bank wont give you a loan at a good interst rate ect.....real estate has become huge the past years that if one bank wont do it, there is one that will. Do your checks and balances for financing. Good luck.

My personal experience: by a fixer upper and do it yourself if your handy. Can be a hassle during the process but in the end when you see the numbers you will forget all pain!! I have dont it twice in the past 3 years and have had awesome return.

[Celeste 341]

Coming from a former mortgage broker - go to your BANKER - mortgage company loan officers work on commissions. The Banking Commissions are trying to regulate commissions, but there are still ways to boost fees, trust me.

If you have any military background - a VA loan is the best way to go as THEY have capped the fees that can be charged.

Definitely get a buyers agent, don't just rely on the sellers agent - they're getting all of the comms and may stuff you into something that's not right for you.

Don't count on rental income on the property for financial qualifications if you don't have a sure thing lined up. Loan officers will tell you a certain percentage of your income for your payment - try to stay below it. The RESPA math is inaccurate at best! Also be careful using the rent word when applying for your loan. If your property is considered something other than your primary residence, sometimes lenders will want to charge you a different (higher) rate.

If you can swing a downpayment AND get a house that you can fix up, your loan to value ratio will be excellent within a couple of years.

Good Luck & Congrats!

Celeste

[RCBill 14]

Michael,

All good advice here. Being a fiscal conservative, and an old guy, I would not go with anything other than a basic 20% loan. However, friends are buying using creative financing and doing very well.

As you recognize the importance of purchasing your home, you will soon recognize that you can make good money investing in real estate. So, as the previous posters pretty much covered purchasing this house, let me take another position. This is called, "Begining with the end in mind."

If you were to become a real estate investor, the type of investor that buys and holds, you may think of your first purchase as the begining of a portfolio of properties that you will someday own. Being a buyer and holder, you will want to put renters in to pay the bills. This is called, "Other peoples money". Unless you have money, you must use Other peoples money to pay for your investments.

So, this first house must be rentable, maintainable, and appreciable.

Sorry, but I need to go lower my handicap. If you have interest in what I've written about, PM me.

Bill

[Jim Carroll 14]

Vandiesel:

Great tip from Ken. I'll remember that one.

IMO, the problem with the 100% finance is that it is almost impossible to ever build equity in the home, at least in less than five yrs minimum. If you use it as a rental, it might not be as bad of a deal. Heck, while you are thinking like that, you might as well consider interest-only. If you are a savvy investor and well represented, it can work out very well for you. NOT for everyone. I'd NEVER do it. I wouldn't be able to sleep at night.

Second, you may find you are not as "loanworthy" as you might think. Are you showing a good income for the last two years?? That is the one that always gets you being self-employeed.

Lastly, a conservative number would to not buy any house that is worth more than twice as much as your income. Income=50K, buy a house=100K. I believe a lender will lend you up to triple your income, so that is the extent of the risk they'll take. Good luck,

at the time it was all i could afford. I had equity from day one. lived in it for 2 years and made $20k off of it.

[Russ Spence 76]

thats what im talkin about ...in the $$$$$$$ from day one ,a win win situation....good job

[Adam12 14]

First, what I would do is try and find an area and price that seems affordable to you. Or what area will be a good return. Then I would contact Fannie Mae about the first time home buyers plan. You may have to put down 20% to get a great rate but there are ways to get a second or piggy back mortgage for that. I did it here in NY with SONYMA for NY state about 3 yrs ago and by the way it was a good thing, they paid all my closing cost and a 30 year fixed at 4.75 thats a deal.