Need Help Clearing Up the Confusion

[SilverBerries]

I am so glad that this board exists. It has helped me through so many parts of this process that I'm basically navigating alone. If you will allow me to ask a few more questions, it will help.

My main problem is not enough cash on hand for closing costs, upfront money, and down payment. I have found out from my loan officer that I make too much money to qualify for one of the new home owner grant programs in our state (GA - $6000/mo.) I will have somewhere between $5000 and $6000.00 to use. No gift from a relative because there's no one to get it from. So I pretty much have to do this on my own.

With a regular home, I know that closing costs can be negotiated into the contract. What about foreclosed homes? How does that work? So many of the houses around here are either foreclosed, pre-forclosure, and/or bank-owned. From reading the board, I know that some banks give buyers' concessions, but would like a general idea of how this would/could work with foreclosures. I'm still working on the possibility of that Homepath Mortgage so that's another possibility, and we're working on finding out some of the answers with the holding agent.

I'm confident that with some help with closing costs, I can swing a $135,000 home. I know that with my scores and income that I can comfortably cover a $170,000 home month to month. What I don't know is, is there someway to swing that price home, figuring a 3.5% down payment through FHA given I'll only have 5-6K on hand.

Also, I'm looking at homes now. How do I need to work the timing of closing, etc. so that I'm not paying several months of rent and mortgage? My lease is up the end of July, meaning that July 1st should be my last payment to them. If I close June 15th, it will set me up for paying my first mortgage payment on August 1st, which will be perfect. However, if I find a home next week, am I really pushing it? By what, a month? If I could get sixty day closing that would be perfect, but I'm not so sure anyone will want to wait that long. Especially if it's a foreclosure.

Sorry to keep asking so many questions, but you all give better answers than my realtor!!!!!

Thanks for your help - I hope to return the favor soon!

SilverBerries

[Anonymous]

A couple of points.

You are going to need at least 6K for this process.  The minimum FHA is goign to be a bit under 5K and then you have appraisal to pay for and some other smaller expenses.  Also keep in mind you will have to cover moving costs, utlity set up, etc as well.  I would say figure it all out and you are talking 7K invested by the time you have actually moved in and made any changes/repairs that are immediately necessary.  (there is always something that needs down)  I only bring that up becuase alot of people see the 3.5% and forget there are other costs involved.

Also, as far as a foreclosure paying closing costs and having a flexible closing that is iffy.  Assume your offer is presented to the bank along with a couple other offers...  Here is what the lender will consider (and with foreclosures and the market seeming to be settling down, a multiple offer scenario is easily possible and in alot of markets most likely)  They will see an FHA loan (sometime probelmatic), requested concession in the form of closing costs and any major necessary repairs, and buyer with limited cash on hand in the deal, and a long close (requiring them to pay more taxes, utilities, insurance, and upkeep).  If that is what you are asking of them, it had better be a strong offer in most cases.  Then you run into the problem of making sure the home will appraise for the amount that you are offering since the bank is likely listing the property at what they feel the aprraisal value is anyways.

So, yes it can be done, but you are also giving the bank plenty of reason to pick another buyer if one is around that has a simpler and quicker offer (i.e cash investor or a buyer with 20% down and conventional financing) even if the offer is for less than yours.

So if there are tons of houses out there you are looking at then shoot for the moon.  IF you find a house you REALLY want, you may have to compromise on the closing date or some of the closing costs to amke a deal that appeals to the seller.

Message Edited by mickie08 on 03-31-2009 09:53 AM

[SilverBerries]

Thanks for the response.

I should have been more specific. Sorry. I have the funds to cover moving costs, etc. I should have mentioned that. It's just the down payment and closing costs that I'm working on. What you had to offer was good because I'm in the process of trying to figure out my options, and these are the things that I need to hear.

Thanks

SilverBerries

[Anonymous]

Each deal is different and each bank handles things differently so it is definitely a guessing game to a degree.  You are in about the smae boat we were when we bought last year and it is hard to decide becuase on one hand you want to get the best deal, but if you complicate things too much with conditions the seller may balk at the deal unless the price justifies the conditions.  And now with alot tighter appraisal standards, it is harder to get loan approval for closing costs included unless the price is under market value.

[Anonymous]

hello, just closed on a home today in Ga. A lot depends on the seller.  tell you there almost giving houses away in Ga. Our home was originally listed for 300k. By the time I found it, it was 249k. After looking at it, My hubby wanted to sleep on it, can you believe the next day the realitor meet him out there saying that her mgt. just got out of a meeting with new listing prices. This same house was now listed for 200k. We did 3.5% down fha however the seller paid 4k towards closing so we brought 9023 to the table for everything. Closed thin afternoon. Anything is possible in Ga. Was told 3 weeks ago in SC that hubby didnt qualify for fha. strange but true.

keep searching.

mariette

[SilverBerries]

Mariette and Marie:

Thank you for your help. Your words have been both encouraging and helpful.

Guess what? I found the house I want last night! I was driving through a neighborhood to make a return look at another house I'd seen previously and this one was just there!!!!!! It has everything that is on my "must" list, most of my "prefer" list, and even some of my "want" list. It just felt so right.

It's not a foreclosure. It's a "for sale by owner," which I guess puts a whole other twist on things. Without a realtor, I don't know what the current mortage owing is, the surrounding COMPS, what the house was originally bought for, nor any of the other helpful info that you get from them. They're asking $160,000 for it, but according to Georgia records most homes are going for about 91% of asking price, which would make this one about $145,000. I'm more concerned with getting closing costs included as opposed to a lower price, but would love both! I am no good at negotiating, so I'm hoping someone (dd, ds, etc.) can help me with that part.

I am so excited, I can hardly think of anything else.

One major obstacle that I'm going to have to get worked out is my lease. If I have to, I'll pay lease and mortgage payments for a month. Lease is up end of July and I can't imagine that we'd close any later than the middle of May if all things go well.

I'll let you know how it goes.

P.S. I just got approved for a 30 year fixed rate FHA. She'll lock in the rate as soon as she knows the details on the home.

SilverBerries

Message Edited by SilverBerries on 04-01-2009 08:30 AM