Realizing the American Dream by saying I want to buy a home and doing it
If you’ve never owned a home, chances are very good that you’ve said to yourself, “I want to buy a home.” If that’s you, here are the things you need to know about getting into your first home.
Think hard about what you want. Melanie Pinola has five tips every first time home buyer really needs to consider. Her fifth tip is the most important. She says, “Don’t be afraid to walk away.” In other words, there are more houses out there. If something doesn’t fit, feel right or you are just uncertain, don’t buy it.
You must buy a home you can afford. That means making the monthly mortgage payment, plus insurance and taxes. If there’s a homeowner association, those dues have to be figured into the cost as well.
Zillow offers this mortgage payment calculator. It gives you the total amount you can borrow, explains what the payment goes to and allows you to vary the down payment, include your current debt load and your income.
The best way to find out how much house you can afford is to get pre-approved for a mortgage. Most banks offer this. The loan officer can walk you through the process and you come out knowing exactly how much you can borrow and what the monthly payments will be. Taxes and insurance should be easy to estimate based on your loan amount.
FINDING A HOME
Homes are for sale everywhere. You can go through the most common route and have a real estate agent find a home for you. You can look through the classified sections of local papers to find homes for sale by owners. Today many homeowners search online.
If you’re willing to bide your time, you can even buy a house for pennies on the dollar to many thousands of dollars less than the fair market value of the house.
You’re probably saying “I want to buy a home like that right now.” Unfortunately, it doesn’t happen that fast.
The two routes to buying a home for less than it is worth are tax defaulted property purchases and short sales. Neither moves as fast as the traditional way of buying a house, but you certainly can save a lot of money.
A tax sale is when a house has unpaid property taxes. The local tax authority sells the tax at an auction, a tax lien certificate sale or a tax deed sale. You don’t get to choose the kind of tax sale. That’s set by state law. The tax collector’s office in your community can tell you which process is followed there. Ted Thomas has a perfect program for newcomers who want to purchase at tax defaulted auctions.
Depending on the kind of sale, you can take nearly immediate possession of the home or you have to give the homeowner time to pay you back.
Regardless, property taxes are a tiny fraction of the value of a home.
You can find out when tax sales are held at the courthouse and in the local newspaper. Ted Thomas’ Resource center has an auction calendar.
This takes the most amount of time because the bank may be losing money on the short sale. The bank is going to consider offers from more than one buyer and it’s going to evaluate those offers carefully. Most offers are rejected. The bank generally doesn’t explain why.
You can get on the list to buy a short sale by talking to banks. Tell the mortgage department, “I want to buy a home and I’m interested in buying a short sale.”
While the house is being sold for less than what is owed, it’s probably going to be sold to close to what it is worth. If you go in with an offer well below fair market value, the bank will say no. If your offer is close to the what the house is actually worth, you stand a better chance of being successful.
The advantage here is when the bank accepts your offer, you’re in. Sign the paperwork to buy the house, sign the mortgage documents and move in.
Need more information about buying your first home or investing in real estate? Look through my blogs.
Ted Thomas is a Florida-based author and publisher who specializes in distressed properties. Visitors to his website will find 3 must see FREE instructional videos. No credit card required. These videos will give you everything you ever wanted to learn about government tax defaulted real estate which is sold at public auctions for 10 cents to 20 cents on the dollar. You’ll also learn the secrets of tax lien certificates which pay guaranteed returns of 16%, 18%, up to 36%.