ResalesThe Basics: Home Buying 101
You need three things to buy a house -- good income, good
credit, and some cash. And if you lack any one of those,
sometimes even if you lack two, there is often a way around
it.
After all, if you have enough cash, income and credit
won"t matter. You can simply pay cash for your home. If
that"s your situation, in fact, you"re in a strong negotiating
position and can sometimes buy at a bargain figure, because
you represent a sure thing, a simple transaction, for the
seller.
So what if you have good income and credit, but lack money
for down payment and closing costs? Several options are open
to you. For starters, veterans can obtain a VA-guaranteed
loan with no down payment at all. And if you can find sellers
who agree, the VA will allow them to furnish the cash outlay
you need, covering everything from bank points to your prepaid
property taxes.
Any buyer can apply for an FHA-insured mortgage, with down
payment of less than three percent. New regulations allow the
down payment to be furnished by a relative. Some of your
closing costs (prepaid mortgage insurance premium for example)
may be financed along with the rest of the loan. And a
cooperative seller may agree to cover some of your other
costs.
Or perhaps you"ll find a seller willing to "take back"
financing -- let you pay month by month on a mortgage, with
nothing down and minimal closing costs. You"ll need a
sterling credit record and really dependable income before a
seller is likely to take such a chance on you, and it will
help if the seller doesn"t need immediate cash. Small income
properties owned by elderly landlords who are tired of
managing tenants are likely bets.
In recent years, many new programs have offered special
opportunities for those who can"t meet the usual credit
qualifications for mortgage loans. Some of these programs are
federal, others are state-sponsored or even local. Some
require you to receive credit counseling and attend education
seminars on how to manage money. Any good real estate agent
should have information on what"s available in your area.
Homebuyer"s Advice