Profile picture for lybreid

First Time Home Owner, Advice?

I am 21 looking to buy a property, tired of renting, ive talked with a lender and I can get 100,000... I don't know where i should go from here... ive been looking for a 2bed 2bath... Im seeing a lot of foreclosures and pre foreclosures in my price range.. should I go for those or is that a bad idea... is my lend amount to low?
  • August 07 2014 - Denver
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Answers (9)

Profile picture for wetdawgs
Thank you for the complement Elise.
  • August 08 2014
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I don't know who or where wetdawgs is but he is very wise.
 
The clients I've had that have the best FICO scores and seem to find the best homes for themselves are very conservative with their money. They are never tempted to live beyond their means or scrape the barrel to get that bigger shinier new home/toy. The refrained from using their home as an ATM machine for toys back when it seemed prices would never do anything but shoot straight up.

I always advise Real Estate because I understand it and you can live in it. It never folds and goes out of business. It may scare you sometimes (like between 2004-2011), but it will eventually come back and continue to carry your up. Like swinging ladders on an old school video game, you can jump successively higher into new levels over your life, house to house. As long as your mortgage amount remains constant, it will seem less and less in comparison to rents as time goes on.

A good Realtor who has been around the block a few times can be a great help. One thing they will tell you is that good deals can be best found by keeping your options open. Don't focus just on foreclosures or anything else.  Get familiar with the market and look at everything on the market. 

Pre-foreclosures are also known as short sales. You can often get them for less than you'd pay on a regular sale because fewer people want to go through the long difficult process to buy them. It is a sale where the seller owes more than it's worth.  On these, an agent has listed them at current market value (sometimes they do lower to attract buyers). Once an offer comes in, the sellers sign acceptance and then it is up to the bank to approve or not. A "hardship letter" written by the sellers explaining why they can't pay the mortgage, seller financial information and the offer will be sent to the bank by the listing agent.

  The bank will take an indefinite amount of time to decide whether the sellers really can't afford to pay and whether they'll take the loss and allow the sale to go through. They'll order a BPO (have an agent do an estimate of fair market value) and be speaking with any investors involved. If they do approve the sale, it may be contingent on the buyer paying certain extra fees, the price being adjusted to the BPO price and other things. If all goes well, you get the house. If not, after waiting months for the answer, the bank will decline or foreclose.

Foreclosures listed on Zillow are not for sale. They are telling you that these houses sold  in the foreclosure auction on the court house steps. The foreclosure auction was when the owner lost them and the bank or an investor received them. They may still have liens on them (money owed to others homeowner association, work done, etc). The new owners, after clearing the title (which can take months), may put them on the market, they may rent them or they may just hold them for an undisclosed period of time. The price listed with them are not an asking price. It is the price owed when bank "bought it back" at the foreclosure auction or that the investor paid at the auction.
  • August 08 2014
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Profile picture for wetdawgs
Google "down payment assistance Colorado" to get started.   A good Colorado lender could help you considerably.  I've been impressed with posts in Advice from Nick Netherton (spelling of his name may not be perfect)

A couple of words of advice from a person with grey hair:

a)  Never spend every last penny on home purchase.   If you have little savings, you may be thinking about this too soon.

b)  Buy for less than the lender says is your pre-approved maximum.   What happens if you got laid off and it takes two or three months to find a new job?  Your car breaks down?   A cushion it hard to save up if you are spending every last penny for your home.   Beans and rice can be tasty, but not every day.

  • August 07 2014
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Choose a good Realtor to help you through the process.  Foreclosures can be a great deal but if you don't have sufficient cash to make the repairs needed and updates you want then you will not be happy.  Most young buyers tend toward more move-in ready properties because they don't have the cash for repairs/updates or the experience to complete them on their own.  First time homeowners are also almost always surprised at how much they spend in the first couple years with maintenance, upgrades, furniture and decorations.  Make a monthly budget and make sure you will be comfortable making mortgage payments and have money left for furniture, maintenance, hoa fees etc.  Just because the lender will loan you $100,000 doesn't necessarily mean the payments will be comfortable for your personal budget.  Finally, take your time looking at properties as it is a BIG DECISION and hopefully a great one for you.  Best of luck!
  • August 07 2014
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Profile picture for lybreid
Yes I Am Looking At Townhomes And Condo, Not An Actual House, My Credit Score Is 758 and I Only Have One Credit Card So My Debit is Really Low....
  • August 07 2014
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Well great job on deciding to purchase a home at such a young age, its a great investment to have. Your purchase power (lend amount) is based on your income and debts so without knowing those things I cannot tell you if its low since I did not pre-approve you. As far as looking for a property in that range depending on what exactly it is you are looking for may be the challenge. If you are looking for an actual house than it is going to be tough at that price point because the homes in that range usually need quite a bit of work regardless of if they are foreclosures or not. I would recommend looking at townhomes and/or condos. I hope this info helps, please don't hesitate to reach out with any additional questions.
  • August 07 2014
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Profile picture for lybreid
Thank You For Your Comments....

How about Advice on getting Downpayment Assistance, Or Grants For First Time Homeowners?

And Yes 100,000 Is The Most I Can Get At This Time
  • August 07 2014
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1. Ask your lender if $100k is the max you can be approved. That way you know for sure. Get a pre-qualification letter.
2. Get a good realtor to help you.  You need someone who will explain the process to you and look out for your best interest.
3. Save for down payment and reserves.  You may already have the funds for the down payment, but you want to have additional money on hand after closing to make improvements and as a backup in the event a repair is needed.
  • August 07 2014
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Profile picture for wetdawgs
Welcome to Zillow and thinking about homes.  The link in the "we think we've answered this question for you!" just below your post is useful reading.

Zillow has a "potential listings" category with blue dots.  These include preforeclosures and many foreclosures.  They are not on the market at this time, but may be in the future.    While it is possible to get  bargain in these categories, usually you get a home that needs a heck of a lot of work (and money) and often end up spending more.

  • August 07 2014
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