Buying Houses getting emotional can cost you money
So you are thinking about buying a house and looking on the internet for some basic ideas of what is the best starting point. Many prospective home buyers are going to go directly to the the financing, down payment, bad credit, can I buy a home with no down payment search. The truth is real estate investors that buy and sell houses have a non emotional connection to a property in terms of its curb appeal. The true investor is looking at the root equity whether that's in the location only (for a tear down) or some compelling feature or...in most cases, the price.
Can you really afford to buy a house?
First, if someone is offering you a 100% financed no money down bad credit home loan you need to probably run now. There are variable options for seniors and veterans that can qualify for some HUD and government financing, but you need to stick to the government websites for that verified specific information. If you find a private source for 100% home mortgage loans without a down payment I would beware of what you find.
Buying like a real estate investor
If you want to buy a home the way real investors do you need to get out of any “emotional commitment” to a property. Just because the windows face the sun in the afternoon or it has a man cave, is not a reason to buy a lemon property. Real estate investors look at the numbers, local valuation with a property search engine and kick the tires on the investment. Getting down to the property disclosures the experienced real estate investors will bargain against the property faults, home repair issues, tax liens, natural hazard disclosures and other specific property information.
The first thing to consider before buying a house is the true valuation of the property based on several factors.
The down payment
- Is this a good investment in a good neighborhood?
- What are the local property valuations?
- How does the home compare to other properties in the area?
- What does the property seller disclosure reveal?
- Is the home in a natural hazard zone?
- What repairs if any, are needed to fully rehabilitate
- What does the house inspector say? Should I rely solely on the home inspector report?
- What year was the property built? Statistics show most homes over 10 years old will need some form of repair.
- Has the seller done a recent repair? If so, was this done on a budget to simply get a better sale price? When were the repairs done, and by whom?
- What does the home valuation software price say? Don’t rely on any algorithm or computer program to value the home, but use all the information you can to drill down the real price.
Whatever way you split it you are going to need around 20% down to buy the house. As mentioned there are options to lend with many government programs but by the by you will need a standard home mortgage loan. When you apply to the bank expect many hurdles and hassles as this is the way they do business. You can get a private money loan in 3 days but especially if you are a first time buyer you will go through the mill trying to get a loan.
Ironically having bad credit if better than having no credit. Also having a bankruptcy is better than having no credit. If fact, you can apply to pay a 90% cash down payment to a home (that the bank can foreclose if you default) and you will still not get a home loan with no credit.
I know, because I asked 3 major banks the same question. Citibank, Wells Fargo and Chase will not give you a home loan even if you have 95% down, without credit, its just the house rules. If however you were recently foreclosed, have bad credit or a bankruptcy you might have better luck?
The point is these days ( post market meltdown) its a topsy turvy world with direct home mortgage lenders.
Renting and saving
This is why I choose to save and buy all cash direct to the seller. Renting to save the cash you need to buy a home is the way to go for total savings. In areas where the rental costs are rising at an astronomical rate in cites like Los Angeles, you might have to rent for many years until you can buy a house.