Can you think of How many ways you can cook an egg? I will have to admit that eggs benedict is my favorite and please file it in your memory bank. That said, there are also many ways in which you can purchase a home in today's market, and I hope to share some strategies with you in this blog. In this week's episodes, I visited with the founder of Real Home Solutions and a well-known National Mortgage Banker of which both provided great insights for my audience in how to buy your first home or investment property. Many folks have the misconception that there is only one traditional way of going about in purchasing, but that could not be further than the truth, it is called being creative in how to cook homeownership to meet your goal. I know, rising house prices makes it tough and it requires you to be smarter about what kind of a home, its location, and when to pull the trigger on your purchase. My empirical experience has revealed to me that buyers are looking for the perfect house, Which I do not minimize, but I think it is better to find the right house and then make it perfect to your liking instead. I will tell you, you will have less competition and will put you in a better position to negotiate the price. How about looking for the smallest house on the block and adding an additional room after the fact? Or find a one-bedroomed house and afterwards add a second floor with two bedrooms and a bathroom?
You do not have to go through this adventure by yourself, but being creative and resourceful can be done if you surround yourself with the right people, such as a well-seasoned real estate agent, mortgage banker, or an experienced investor as a mentor . I am here to tell you that there is no substitution for experience, and think about it, these professionals will be on your side of the negotiating table. So, where do I begin? You begin with the Mortgage Banker who has developed a professional business reputation noted in real estate magazines, or other avenues of the media. This Mortgage Banker will inform you of loan products available to you based on your current credit scores and annual income, and do not forget, there are a variety of ways to cook your eggs. Another myth that tends to prevail is you need 20% for a down payment, this is ludicrous! The fact is, you can get into your home with as little as 3% or even nothing down, and this is where the Mortgage banker can help. Rest assured, I am not denigrating the 20% down payment, since it does give you financial strength that may get the seller motivated and may lean toward accepting your offer when there are multiple offers on the table. Here are some tips on how to boost your purchasing power by saving for the 20% down. If possible, I would recommend cutting back on dining out, cancelling unnecessary subscriptions such as cable TV which is going by way of the dinosaur since internet streaming is capturing the market exponentially. Shop for reasonable vehicle insurance coverage without compromising what you already have, and do your grocery shopping at food outlets, and you may be astounded how much you can save over a period of a year. Are you kidding? No, I am not! Yes, it may feel like a huge sacrifice in the interim, but inch by inch is a sinch in meeting your goal of homeownership. Once you have a plan of action with your Mortgage Banker, it is time to look for a real estate agent who also has made a name for himself in the industry. By the way, California allows for a real estate agent to represent both seller and buyer, and in my personal view it is almost criminal. Have you ever heard of the same attorney representing the plaintive and the defendant in a court room? Make certain your agent is representing you exclusively and has your best interest at heart. Here is a little secret, when you make your offer, tag along with your agent when he presents your offer to the listing agent, this puts a face on your offer thus humanizing it and may give you the edge or advantage of acceptance. There are countless down payment assistance programs available locally and nationally providing grants that you may qualify for as a home buyer. Here are some links that just might fit the bill, just google the following phrases: A. National Homebuyers Fund B. Guide to DPA in all 50 states C. Housing finance agencies in all 50 states D. HUD local home buying programs E. Downpaymentresource.com F. HUD homeownership assistance G. Chenoa Fund H. National Homebuyers Fund And did you know that lenders in many cases will allow for dad or another relative to gift you the down payment? Make certain to be on your dad's good side. All things said, the following is my favorite strategy to acquire a home or investment property and that is by utilizing a Lease with an Option to Buy of which my guest referred to as Rent to Own (RTO). Walking in, the expenditure is nominal in this kind of an arrangement, but you need to solidify the purchase price, length of the lease, outlining the repairs to be performed by you and how much of the monthly rent will be attributed toward the down payment from the very outset. From the lenders standpoint, keep in mind that not all of your rent can be allocated toward the down payment, but only what is above and beyond the current average rent for the area and for the size of the home. If you locate property needing repairs, many times the seller will work with you if you suggest a Lease with an Option to Buy since the owner cannot afford to do it himself for whatever reason, it is just a matter of you asking for this arrangement. It is a win-win for all parties, because if you do not exercise your option to buy by the end of the lease, the owner will be left with a completed renovated property. Here is a caveat, however, make sure you record the lease agreement in the hall of records making the agreement public, so that the owner will not sell the property from under you as he observes the great home improvements you are making. Trust me on that one, fortunately this never happened to me, but it does not mean someone did not try, greed is a powerful thing, that is the world we live in. This much is certain at one time, that all roads led to Rome, or should I say contextually, all roads lead to (home)? If you find yourself at a crossroad, or at a point of making a decision and need a little more direction to make inroads toward homeownership with free advisement and in confidence, do not hesitate to drop me an email, a call, and smoke signals are also acceptable.
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