Tips for Buying a House

You are in the market to buy a house and really you are a bit confused about which way to go. Do you hire a Broker or do you try looking for a for sale by owner in the newspaper? Many questions about which is the proper way to spend those precious dollars you have so earnestly saved over the past few years. Tips for buying a home must start with loans.

Do I Qualify for a Loan:

Before getting into looking for a home, it is important to find out if you even qualify for the loan in the first place. Looking at what a lender wants and then looking at ratios they require. There are many things involved in buying your first time or second home for investment. 

What does the Bank Require:

1. Down payment must be in the bank for 2 months or more. If you are doing a 80/20 loan which requires no down payment, then this rules does not apply or a zero down loan with gift money. 

2. Debt to loan ratio must be between 28-36%. This means that you take your income minus debts and then times that amount times 28%. That figure is what you will qualify for in a monthly house payment (the lower end of qualifying rate). That figure must include taxes, insurance and PMI (private mortgage insurance). PMI is an insurance policy for the bank, guaranteeing them that if you default, the loan would be paid in full, so it is very expensive. Most lenders estimate .5% of your payment.

PMI can be avoided by placing 20% down or more on the loan. When placing 20% or more down on a loan, you also get lower discount points from the lender. So with 20% down, there are bank perks not available to a first time home buyers program.

3. Proof of income. The bank will want to see that you have steady income for six months or more. If you are self-employed you will need to supply tax returns for two y ears.

4. Two months of checking account statements.

When you sit down in front of a lender check on all the programs they are offering. They will tell you about fixed rate programs (the interest rate never changes) and variable programs ( the rate varies sometimes every month). A fixed rate is better for anyone in these foreclosure times, especially first time buyers. Many home owners are losing their homes due to rising rates on their variable loans.

Title One FHA Loans:

If you are getting an FHA loan, then the lender can apply for at the same time for a home equity loan also for an amount up to $25,000. FHA does not require any equity in the home. There are closing cost involved in this type of loan, but for a higher interest rate, some lenders offer a zero point loan.
FHA is one that requires no equity in your home. Typically on a regular refinance, lenders require a minimum of 20% equity which technically could take years and years, so this program is an advantage.

Shopping for a Realtor or For Sale By Owner:

If you are a first time home buyer do not even consider buying on your own. There are millions of things that could literally "take you to the cleaners." Without experience in contracts, laws and contingencies, you would not be able to protect yourself. After you have purchased several homes and have more knowledge, then consider the "for sale by owner" but until then stick with a seasoned Realtor.

There are about as many Realtors available as homes, so when choosing a Realtor, look for the same qualities you look for in your home. Location, years of reliability and beauty. Yes beauty is an aspect to look for. Not beauty of the face, but beauty of the heart. An agent who is kind and gracious to you at the worst of times and even when you don't qualify for the loan, is an agent to hire.
Location, Location and Location:

When shopping for a home, especially a first home always look for a home in the best location. Never ever buy in a bad location for price. Some will think about buying a beautiful home in the low end of the city or slums. These beautiful homes never will appreciate in value like a home in the better areas and they are not safe. If you want the best value, look for a place that you could sell easily in 6 months.

Writing a Contract:

When you finally find the perfect home and you want to write a contract look at many things. It is a buyer's market and in a buyer's market no one is offering full price for a home unless your Realtor recommends you to. In some cases, the home has been greatly reduced to allow for a quick sale, due to an impending foreclosure. In that case follow what your Realtor tells you and what you actually qualify for. 

Do not accept a home in "as is" condition. Demand the seller give you a disclosure on everything that is wrong with the home and do a home inspection before placing money in escrow or signing escrow papers. This can be done one to two days after having an agreed upon offer. Insist on a home warranty plan and never agree to sign an arbitration agreement. In many states this takes away your right to litigation in case you are wronged or even lied to.

In the end, buying your first home can be a very enjoyable time. It is exciting seeing all the beautiful homes and it is wonderful thinking of raising your children in a home all their own. Get pre-qualified and know exactly what you can buy and then shop carefully and wisely. First time home buyers, don't be ashamed to take your mom and dad to see the home you plan of buying.

Foreclosed Houses: How to Get Your Dream Home for Less

This is a buyer's market and there are hundreds of foreclosures available. Now that President Obama is putting forth a new plan to aide the short sale market, more and  more homeowners will be looking to sell their homes quickly.  So buying your dream home just maybe easier than you thought.

Oh if life was just that simple to get my dream home for less and much less through a foreclosure sale.  Does it not make sense if you are going to buy a home that it would be a foreclosed home?  Yet, better buying a home from a seller who is in foreclosure to save him from going through the process.  Well, I sure wish it was that easy.  Read on about how to do this:

All the Internet is a buzz about foreclosures.  I am sorry, but foreclosures have been popular since I first started in Real Estate back in the 80's.  People or investors have been buying them up like crazy, renovating and then place them back on the market and becoming rich.  Those investors are now writing books on how to become a millionaire with no money down.  Things have changed since the 80's on how to buy foreclosures, but the deals are still there.

Buyer Beware Should be Stamped on Every Foreclosure Sale:

A first time home buyer cannot and I mean cannot show up on the courthouse steps and purchase a home without legal representation.  First you must be willing to pay cash for the home in many states such as California and second you have to be willing to satisfy all the liens against the property.  Most lien holders will show up on the steps also to get their money.

A smart way is to have a title report before going to the auction and see exactly what is showing against the property.  Then you need to evict the owner of the property, which is not that easy to do.  After you evict the tenant, you need to make the repairs done by the angry tenant.  The costs are mounting here and your once very good deal for your dream home, just may end up costing you more than one that is currently on the market.

Where to Look for Foreclosures:

There are a number of ways to buy foreclosures.  As I have discussed above, the best deals are on the court house steps, but this is also the most dangerous way to buy.  Understand that if you purchase through a bank or other government owned place the price will be more.  The good part about most foreclosures on the market is that the tenant will be evicted at this point and some repairs will be made except for HUD homes.  They do allow you to finance the repairs necessary on the home.

The places that have foreclosures are:

1.  HUD homes through sealed bids.
2.  FHA homes
3.  Fannie Mae and Freddie Mac homes
4.  VA homes
5.  Bank REO's (also known as the loss and mitigation department)
6.  IRS and the Marshall's Office
7.  Local real estate office

Websites That Have Foreclosures for Sale:

One of the main websites to search for all listed foreclosures is Realtor.com.  They are the largest researched site on the web.  Every home that is listed on the MLS (multiple listing service) will be available to them and no other place will have more.  There are many sites that advertise foreclosures and they charge for their service.  This is not necessary and most of the time a rip-off.

When searching for your dream home it is best to contact several real estate agents and ask them to search for the best deals and to call you when they have what you are looking for. It is not necessary to commit to one Realtor, but commit to the one who brings you the best deal.  Contact your local title company and ask for a list of all foreclosed homes.  Once you get this list start sending out letters to the homeowners offering to buy their homes.

Many foreclosed homes can be bought with little money if you are dealing directly with the homeowner.  Many times you can agree to assume the loan or do a lease on the property. With more and more foreclosures everyday, creative financing is ever popular.  Sad to see a family lose their home, but if you can help them out of a bad situation it is better.  Remember to always check with an Attorney before agreeing to any deal if you are going through a private owner.

How Realtors Can Take Advantage of the Current Housing Market

A Realtor's job is to build a client list and through that client list, work referrals and do what is necessary to survive. Looking for potential clients such as open house, floor duty and cold calling. There is a large amount of ways to work in a foreclosure market, you just have to look. How a Realtor can take advantage of a declining foreclosure market by being aware of the new situations and adapting towards change.

I became a Realtor 22 years ago and during that time the market was in crisis. Home prices were dropping like crazy and Realtors were resigning their positions and choosing to go work for a salary. Not me, I started in a bad year, but I survived. How can a Realtor take advantage of the current housing market? By leaps and bounds and lots of hard work. Any good Realtor can survive any type situation and at any time of the year.

Ethics are the keys:

Ethics and good old know how will get you through this crisis. No matter how poor I ever was, I never ever took advantage of anyone. I had many couples come to me after they just had a bad fight and want to sell their home, I refused. I would send them home to cool off and tell them to come back in a week to talk. Not one of them returned. I cut cost and commissions to help people during these times and they remembered me big time.

I remember one woman who flat out lied to me about her situation and I cut my commission to help her buy a huge home. She was a dentist and she repaired every single tooth I ever needed having fixed. She referred three clients to me and she was my new best friend. How can you take advantage of the housing situation, never act poor. Never beg, borrow or steal and never loose your ethics.

Invest where needed:

As many people are desperate to sell their homes, they will come to you and ask you to find a buyer. If you see a fabulous deal and you have the funds invest. BUT, first disclose to the seller what your position is and tell them that you are buying the property under market value. Many sellers will want to sell quickly and will agree. Note on the sales agreement that you have disclosed your fiduciary duty to the seller.

This is a time to become a millionaire investor. It is a time, not to take advantage of anyone, but to help those who need helping. There is nothing wrong in investing in foreclosed properties for yourself. What do you mean, you want to stay home and read up on the magazines. Get up and work and work hard and you will succeed.

Hard work, due diligence and ethics will help any agent to succeed. I know, I went from a Southern girl to a owner of the largest independent office in my town. I did it in the worse of conditions and I did it honestly and truthfully. One of the main requirements to get a license is "Honesty and Truthfulness." When you become a Realtor, you testify to this. A Realtor is a member of a board of Realtors not a sales agent.

If you are a member of the Board of Realtors, you can be brought up on charges for acting against ethics and honesty. Realtors have to pay fees every year to belong and they are the cream of the crop, hopefully anyway.

Short Sales and Foreclosures:

It is a time to specialize in short sales and foreclosures. You can send letters out to all families in foreclosure and offer to help them. You can get a list from the title company and they will let you know how to contact them. I went to a seminar once and this guy told me to say simply, "I have someone interested in your home," and sign my name in ink. I received tons of replies and I specialized in short sales. I did take a reduced commission, but a 5% commission of 5 million dollars is a lot better than 6% commission of nothing.

Now is not a time to retire and sit back, it is a time to work longer hours, contact your past clients for referrals, send out letters to foreclosures, cold call on the phone and "walk the walk." Don't sit back and drink coffee, work and work harder. It is possible, I know for sure.