I"m also a Real Estate Broker. For two years, I helped people buy homes, but now I always refer buyers to a colleague. As I get part of her commission, I care if your needs are met.
It’s a unique time to buy a home. Home prices are down substantially, because so many homes were foreclosed and are now owned by the banks. A bank-owned home may be a bargain, or it may be overpriced and in bad condition. Always have a property inspected before you purchase; it’s well worth the cost. Make sure you buy a home that will meet your needs for the long term, because housing prices may not recover for years.
Choose an agent. I always recommend you use a skilled real estate agent to buy your home. A buyer’s agent makes the process less stressful, because she'll keep a close eye on your housing market, and arranges the complex paperwork.
Many people start their search on the internet, looking at location, beds and baths, square footage, and price. But listings present a home from the seller’s perspective, missing details that will matter to you. Your agent will preview homes based on your specific needs, and will suggest what to offer based on recent, nearby sales. Since the seller pays the commission, you get all these services for free.
Choose a lender. The right lender can help you improve your credit score, find a loan that meets your needs, and get you pre-approved. Then you’ll know what you can spend and what your payments will be, and you’ll be ready to make a serious offer.
Loans were easy to get when home prices were rising, but many people were given adjustable-rate loans they couldn’t afford. Once home prices began to decline, and mortgage payments rose, loans failed at ever-increasing rates. As a result, the bonds made up of packaged loans lost all value, and prices of homes began spiraling down. This hit the banks hard, and now they are nervous about loaning money.
Lenders seek a consistent earning history, on-time debt payments, and a debt-to-income ratio below 45%. Because they want to be sure you can make the payments, they will check your credit score and verify your income. Once you have a loan, don’t change jobs or buy anything expensive. The most likely loan these days is an FHA loan, with a minimum downpayment of 3.5% and decent credit.
Consider investing in real estate. With house prices so low, many middle class people can become investors. The bank may loan you most of the purchase price, but you may need to pay cash if the price is very low or if your credit isn't exceptional. Some properties are so inexpensive that rent completely covers your mortgage and other expenses.
You can deduct the operating expenses of the property (mortgage payments, property taxes, repairs, depreciation) and lower your taxable income. Meanwhile, your equity will build as you pay down the mortgage. Essentially, your tenants are buying you the house. It's a pretty good deal if you keep your property for many years, do a good job of choosing tenants, and keep the building in good condition.
I’d love to recommend a skilled agent that will help you meet your needs. Please contact Barry Lefsky at 510-495-7404 or write me at blefsky@sbcglobal.net
None of this is legal advice, nor am I actively working as a real estate agent.
More information is available in these attached articles.
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