how can get started if i'm really interested in this property?

Asked by letty, Boyle Heights, Los Angeles, CA Thu Jan 22, 2009

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Steven Ornel…, Agent, Fremont, CA
Thu Jan 22, 2009
Hi Letty,

As far as buying, a Pre-Approval is your first step (NOT a pre-qualification, see: for the difference between the two) so you can be ready to act when you need to, or be aware of any issues that may prevent you from buying when you want to.

Now, I'm going to give you some advice I would give to my own mother, really:

If money is tight as far as a down payment, look to an FHA loan. This program only requires a 3.5% down payment. Because you will be financing 96.5% of the sales price, you will have to pay Mortgage Insurance for a MINIMUM of 5 years, or until you have paid your original LOAN AMOUNT down to 80% (not the loan amount is 80% of current market value - very different).

There are some other reasons why I like FHA loans. FHA loans allow up to a 6% Seller Credit for Closing Costs (non FHA options only allow 3%). Seller credit requests should be asked for when the offer is made. FHA loans also require that any health & safety issues be corrected as a condition of final loan approval. Since Seller Credits can't be used for repairs, this is a second level of "protection" so do get all you agent-recommended inspections!

Another reason I like FHAs right now is due to the current market direction - which is down - and probably so for the rest of 2009. This begs the question: Does it make sense to put a large amount of money down during this economic time (I don't think so). I would hate to see you put money down on a Home only to have the market vaporize it before you hit your one-year anniversary! Instead, keep the cash safe and earning interest in a savings account. You can always pay it into principal if you like later, but understand that every principal dollar you pay into a mortgage provides a 0% return – it’s the market that decides return.

One final option you can look at if you don't have a 20% down payment is a non-FHA loans that covers the cost of the Mortgage Insurance in the interest rate. You do pay a little higher interest rate, but this is almost always tax deductible under Schedule A. This is a good strategy too, as MI will cease to be tax deductible on 12/31/2010, unless Congress extends it again.

Finally, absolutely read the following 2-page document. It may be a little like drinking water from a fire hose at times, but your thirst for the process of finding a competent loan professional will be quenched:

By the way, I'm a Mortgage Banker/Broker; however, I don't do FHA (Federal rules prohibit an FHA loan agent from deriving income from other Real Estate activities - I'm also a Realtor). I’m not a Realtor in your area either, so if you would like me to identify a professional Realtor in your area just send me an email.

Best Regards, Steve
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M.D.J, , Los Angeles, CA
Thu Jan 22, 2009
Getting your financing in place is the first step and because of the location of the property the new buyer might be elgible to receive back a portion of the interest that will be paid on the new home loan.

Need more information, let me know and good luck to you.
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Mario Villag…, , Burbank, CA
Thu Jan 22, 2009
Letty, the first thing you need to do is get in touch w/ a reputable loan officer and see what you can qualify for. If dealing w/ a mortgage broker make sure they are licensed w/ the department of real estate, Banks loan officers are normally covered by the bank's licensing w/ the department of corporations plus ultimately it's the bank that's liable for any of its employees. Once you know what you qualify for and you understand the costs involved w/ buying then find yourself a licensed real estate agent. Find one that is also a member of one of the local board's of realtors. This will help you find someone that is ethical. Remember as a buyer you do not owe the real estate agent anything. The real estate agent will get paid by a commission split offered by the listing agent. Good luck Letty and feel free to email me or call me w/ any other questions.
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