We are both college students. I am 20, he is 21. We both have good credit for people our age. I have about 27k to my name, he has about 45k. what we want to know is what is the best way to buy this house? We are not gonna live there, we want to rent it out and fix it up a bit. Should we get a 0 money down or should we pay a downpayment? We are new at this. Thanks!
2006-10-18 05:01:51 · 11 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
No money down mortgages are NOT a good idea - especially now that the real estate market is slipping. If you mortgage 100% of the house at $290,000 and the value of the house decreases (as most homes are doing now and will likely continue to do for the next few years) then you still owe the lender (bank) $290,000, but you may very well not be able to sell the house for as much as you are paying for it - which means that you will have lost money on it. A terrible situation for two students!
Real Estate investing is risky and should only be done with 'extra money' that you have and that you could afford to lose.
Don't let all of the flipping shows on tv make you think that this is a way to get rich quick - it is very risky.
If you are still insistent that you want to go ahead and do this - talk to a mortgage broker - they can get almost any kind of loan for almost anyone. Also - be sure to have a lawyer involved to draw up an agreement between you and your friend for how costs, responsibilities and profits are to be shared.
2006-10-18 05:20:11 · answer #1 · answered by ms_know_it_all 4 · 0⤊ 0⤋
Your question needs additional information. The 3 things to make any loan work are collateral -the home --capacity--can you handle the debt service and if it is not going to be a primary residence then the rate will be higher and will in most cases require a 10% down payment-- and your credit. The scores are most important. Only a competent loan officer in your area can tell you what you should do. When renting a home the appraisal will have to have a area rents sheet filled out and if the rent you are expecting on this property may not cover the debt service every month and you should also have 6 months of reserves liquid at all times in case renters move out and you have trouble getting new renters in the property.
Move cautiously on this and have a written plan with the person you are getting this loan with as friends can fight over little stuff.
Good luck to you
I am a loan officer in Tennessee
2006-10-18 12:21:31 · answer #2 · answered by golferwhoworks 7 · 0⤊ 0⤋
You should consider putting at least 10% down on an investment property. One key item that you should consider is cash flow. Cash flow is the difference between the PITI(principal, interest, taxes and insurance) payment and the rent you will collect.
If you plan on selling the property within 5 years, you may benefit from a lower PITI payment through an Adjustable Rate Mortgage versus a 30yr Fixed. Remember, you are looking to have the highest monthly recurring Cash Flow on an investment property.
With as little as 10% down, you can get an interest only program, that is probably you're best bet, but I do have banks who will finance 100% for investment, you're rate will be a bit higher though.
Feel free to e-mail me, we lend in 26 States (all the major ones)
dalimortgage@yahoo.com
2006-10-18 15:03:34 · answer #3 · answered by Dali 1 · 0⤊ 0⤋
By federal law, lenders are not permitted to consider your age when making a loan decision, except for the fact that you must be of legal age to sign a contract in your state (18 yrs old). Lenders consider your income, assets, credit, debt, and the overall risk of the loan.
If you are not going to occupy the house, lenders consider it an investment property which is considered riskier than an owner-occupied home. If you don't put any money down, this is also a risk factor. As the level of risk increases, you may see two results. First, the lender may charge higher rates and/or fees for this transaction. Second, the lender may enforce tougher guidelines for this transaction. For example, many lenders require a larger down payment for an investment property. Also, most loans require mortgage insurance and escrow accounts if you are making less than a 20% down payment.
2006-10-18 13:11:57 · answer #4 · answered by mortgagelns 3 · 0⤊ 0⤋
I seriously doubt that at your age you will be able to do so. It is too high risk for the banks. You state that you have money....as in cash or annual income? What about an income to prove to the bank that you can pay the mortgage? While you may both have "good credit" for people your age, you may not have enough credit. Who is going to handle the finances when you have renters, such as paying for repairs, HOA dues, etc? What happens when one of you can't hold up his end of the deal? r wants to sell out? Consider all of these things before getting in over your head.
2006-10-18 12:13:14 · answer #5 · answered by Tangled Web 5 · 0⤊ 1⤋
The only way to ge a loan for 100% of the purchase price is owner occupied. I have looked and looked and looked and nobody actually funds loans for 100% on the purchase price on investment property.
Owner occupied, 100% financing is easy, but if you're not going to live there, you have no choice. You have to have a down payment.
2006-10-18 14:45:54 · answer #6 · answered by Searchlight Crusade 5 · 0⤊ 0⤋
IN WHAT CITY AND STATE? WELL YOU CAN DEFINETLY BUY A HOUSE WITH NO MONEY DOWN AND SELLER CAN ALSO PAY FOR YOUR CLOSING COST DEPENDING ON HOW YOUR REALTOR WILL DEAL WITH THE SELLING AGENT. I CAN TOTALLY DO THIS LOAN MY MOTHER IN LAW OWN A REAL ESTATE AND MORTGAGE COMPANY AND THIS TYPE OF LOAN WILL BE REALLY EASY FOR US TO DO. MARKET IS NOT SOO GOOD BUT MARKET IS A CYCLE ITS GOES UP AND THENDOWN AS OFF NOW ITS DOWN BUT GIVE IT A YEAR OR TWO ITS UP AGAIN SO NOW ITS THE BEST TIME TO BUY A HOUSE WHILE ITS CHEAP AND YOU CAN BARAGAIN WITH THE SELLER SINCE THEYARE SO DESPARATE TO SELL THEIR HOMES. IF YOU NEED MY HELP JUST E-MAIL ME AT RAMANLAPAZ@AOL.COM AND I KNOW ITS HARD TO TRUST SOMEONE SPECIALLY WITH THE RUMORS GOING AROUND ABOUT REALTORS RIPPING YOU OFF WELL OUR COMPANY LIKES TO DISCLOSE EVERYTHING UPFRONT SO YOU MIGHT WANT TO TRY US AND I WILL GUARANTEE YOU. YOU WILL LOVE OUR SERVICE
2006-10-20 05:59:17 · answer #7 · answered by troy0220 1 · 0⤊ 0⤋
There are four basic forms of no money down real estate financing for home buyers and real estate investors.
1. - Lender-provided no money down real estate financing.
2. - Government home buyer programs.
3. - Buyer-seller negotiated no money down financing.
4. - Creative no money down real estate financing.
If you pay a down payment, you'll have lower mortgage payments.
Talk to a reputable lender or realtor for further info.
2006-10-18 12:12:45 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Don't listen to what these other people are telling you. You can get 100% on a new construction loan but not if you are just buying. I am a mortgage loan officer. If you want to find out about new construction e-mail me at jamescastle11@yahoo.com. thanks.
2006-10-20 14:27:20 · answer #9 · answered by jamescastle11 1 · 0⤊ 0⤋
why don't you just pay cash with your mama's life insurance.... ?
anyhow yes you can get a loan if you have suffiecient tradelines on your credit.
2006-10-18 14:19:43 · answer #10 · answered by ondreforsure 3 · 0⤊ 0⤋