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forgot to mention this. I am in the California Bay Area.
You should have a property inspection done on the property, to make sure there are not any unseen defects.
I'm sorry, did you say 140k down?
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Haven't seen that in awhile Jay? :)
Hey Xellows,
One thing to consider if you are going to retain an attorney to review the documents. Make sure they are an independent third party. If there fee is paid through the funding of the loan, there could be a conflict of interest that you need to consider.
I'm not a financial advisor, but there HAS to be an investment vehicle that would serve you better.
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that isn't my money. My parents are doing the downpayment.
First, get a good real estate lawyer. A transaction this expensive requires the review of a professional.
Second, if the bank will permit it, get a good inspection from a qualified inspector. If the bank will not permit such an inspection, then consider if the purchase price is so low, relative to the prices of neighboring houses, that you can afford to correct major maintenace problems that you don't know about now.
Third, since your parents are helping you, get their opinion regarding what you want to buy.
If you have the cash for an investment, you should only borrow money if the rate of return on the investment will be higher than your borrowing costs.
Your mortgage will be around 6%, so your house needs to appreciate at 6% per annum to break even on the debt. I know that many posters on this board have short memories and think 6% is easily achievable (we're right around the corner from a recovery, back to that healthy 15% growth rate!), but 6% is in fact is above the historical average in real estate. The chances of you achieving this in the short term are slim at best.
Bottom line - don't borrow money if you don't need to. The chances that you will end up ahead are next to zero. Buying depreciating assets is generally a bad move. Borrowing money to buy depreciating assets is a recipe for ruin.
@subway,
I plan to live in that house for a good 5 years at least if not more and i do realize the value will probably take a hit in the short term. Besides which i am payng $1000 in rent anyway which is about equal to the monthly mortgage payment. If I included property tax and insurance it is only another $300, water and waste managment is going to cost another 100 combine which means I only pay $400 extra over what i am already paying in rent+power+phone
@Tagei,
when i do i bring in the lawyer? when the bank accepts the offer or before?
Xellos,
Does California require a lawyer in a transaction like this? I know in AZ and in UT where I service consumers they do not need a lawyer. If you trust your agent she/he is the one who would answer all your questions. It is a Real Estate Agents right to help you look over the loan documents and any other loan documents pertaining to your loan. The Real Estate Agent should have your best interest. Sometimes working with a Real Estate Agent and a Mortgage Agent who know each other often times just want to get the deal done.
This may spark up the dogs but it is just my opinion. Work with someone you trust and respect.
xellos,
A lawyer can help when documents, written in "legalize", need interpretation.
For example, the bank's "standard contract" may permit the bank to keep your "good faith deposit" if you back out of the deal due to a serious problem discovered by your inspector, such as heavy mold or termites. Your lawyer could probably negotiate some protection for you from serious undisclosed problems.
hi Xellos,
You are putting down an excellent down payment. Anyways i have sold listings and represented buyers in Bank owned property. My suggestion to you is to have a reputable loan broker to help you with your paperwork. If you do have an attorney that can "overlook" the transaction it is even better. One thing to keep in mind is that Financial Institutions are not in the business of holding Real Estate and are not equipped ed to handle such a huge number of offers/counteroffers so they are taking a really long time to answer one way or another. Good luck on your purchase.
... and, it's free and anonymous
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First time home buyer - Looking for some helpful tips.
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Xellos007
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I am first time home buyer. I have already been pre-approve and i already found the house i am looking to buy. My agent calling the other agent and getting the rest of the details and i just need finalize a few things with the bank.
The house is a bank own property that just came on the market. It is listed for 312,000 and i am putting a downpayment of $140,000.
I have heard form other people i need to get a real estate lawyer to look over the loan papers and stuff.
So i am hopping the kind people here can offer me some tips on what i should be looking at and what question i need ask about the property.
Thank You
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