I was flipping through the channels recently when some guy on the screen with beady eyes and a bad wig stopped me from thumbing the remote.
“There are tremendous opportunities in real estate,” the man on the TV said with conviction. “This is the time people should be going out, not buying, but negotiating to buy. This is the time that people should be going out and making unbelievable deals in real estate.”
The real estate mogul, Donald Trump, was being interviewed by Larry King in the midst of the economic depression of 2008-09. He talked about the high numbers of foreclosures in the country and how banks will be happy to give properties away for a fraction of the price.
“Everybody should call up the bank and negotiate,” Trump said.
While that’s true, now is the time to find good deals on real estate, the way he said it sounded too easy. For Trump it probably is. He has money stuffed away in who-knows-how-many corners where he can pull from to buy probably any foreclosure out there. But the rest of the country might not be so wealthy. The rest of the country might be unemployed, barely surviving from paycheck to paycheck, and struggling just to keep afloat. Much of the country may not be able to qualify for a loan, much less have the confidence to go to the bank and negotiate with pockets stuffed with dollar bills.
So, for those of us who do not have the beaucoup bucks like Donald Trump, how do we find good real estate deals? How do we go about buying a house?
First of all, real estate changes all the time. Getting a good deal sometimes takes good timing for the best interest rates and home prices. But, wherever you are, you can find a good deal somewhere.
First of all, you will need some cash to qualify for a loan. You don’t need to be rich, but you need to have steady income. A few years ago it was much easier to get a home loan. Now, lenders want to make sure you have enough income and enough money to not only pay your house payment, but also to survive.
Most people forget about closing costs, taxes, mortgage insurance, and HOA fees when buying a house. Most loans require something around a 3 to 3.5 percent down payment. On a $200,000 home, that means you’ll likely need to come up with something around $10-12,000 at closing. If you don’t have that amount of money, then you will have to negotiate to have the seller pay the closing costs of around $4,000. You should get that all ironed out before you even start looking for a home. However, there are some incentives out there that may apply to your area. Check with a qualified loan officer to find incentives that can make it easier to move in to a home.
So, now that you have the initial money situation taken care of, you want to get preapproved. Visit with a loan officer to receive a preapproval letter. Once you have that letter, you will have stronger bargaining power. Sellers are wary of buyers that won’t qualify for a loan. If you have a preapproval letter, that will give you a stronger bargaining chip, because sellers will know that your offer will likely stand.
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