first time home buyers need some tips and questions answered!?

Question

i am looking to buy a house for the first time but not sure of a few things can someone help!! a friend is selling and i like her home but it needs a few repairs and i dont want to pay out of pocket.
-who pays the realtor if you decide to have one?
-what is the diffrence between a lender and a broker?
-how long after you purchase the home can you get a home equity for repairs?
-can a lender only give you 6% of the loan for repairs?
i will take any tips to save me money thank you.

Answer 1

In most US states, the Seller pays both agents in the transaction.

A lender and broker are sometimes used as interchangeable terms, but basically a Broker can go anywhere to find your loan and a Lender typically works for one financial institution.

As long as you have equity in your home (and sometimes even if you don't) you can take out a HELOC (home equity line of credit) or another borrowing instrument to get funds for home improvements. You can do this immediately if you choose, however it may not be wise in a market downturn where property values are falling.

The lender will not GIVE you any money for repairs. TYPICALLY, they will allow the Seller to credit up to 3% of the total purchase price back to the Buyer for closing costs. If the contract states it and it's agreed upon by both parties, a credit for repairs from the Seller can be given to the Buyer and the lender may have limits for this amount.

Get a knowledgeable Buyer's agent to represent you alone. This will cost you nothing, as they are paid by the Seller and you will be better protected in the transaction. Good Luck

Answer 2

If you are buying from a friend, hiring an agent is a waste of money. The seller is the one who pays them directly, but considering that's 5-7% of the sales price, it's a lot of money, and you'd be better off either reducing the sales price by 5-7%, or getting your friend to use that 5-7% to help pay for your closing costs instead.

A lender is simply someone who lends their own money. They can still sell your loan to another bank later (terms of the loan never change if the loan is sold). A broker is someone who uses a lender's money to close loans. A broker will work with 5-50 different banks, all with their own rates and loan programs, and help you find the best financing package for your needs. A lender will generally have fewer products, but they can also offer great deals too. You should get offers from 1-2 brokers and 1-2 banks/lenders, and see who comes in the best.

After you purchase the home, many lenders will require you wait 6-12 months to take out a home equity loan, if you are attempting to use an appraisal that is a higher value than your purchase price was. This is called "seasoning".

There's no 6% from the lender for repairs. Not sure where that came from, but it's not a rule anywhere. Not like that at least.

My best recommendation would be an FHA loan. FHA will allow you up to $15,000 in repair money, over and above your sales price. Rates are great, easy credit qualifying. And depending on the deal you work out with your friend, you might be able to get your friend to give you a "gift of equity" for your downpayment, so you could actually get into this house with no out of pocket money, and get the repair cash you need, all at the same time. Pretty sweet deal, if it works out for you.

For this product though, most brokers won't have a clue how to handle. This is better done through a big mortgage company or bank. Think Countrwide, Wells Fargo, people like that. Ask about the FHA 203K program. If they don't know what it is, make them find someone for you who does.

Good luck.

Answer 3

Don't have all the answers, but suggest that you get the house appraised, for a fair market value. Buying a house, or anything else, from a friend can be tricky. You don't want to over pay but then you don't want to insult her by offering too little. It is definitely an area of negotiation. See what an engineers report turns up as far as problems with the house. This will be a huge investment and you want to make the right decisions.

The seller pays the realtor costs, but they are in the selling price so naturally you are really paying them. Not sure of the lender/broker question. etc.

Answer 4

I would recommend going with a lease option. There are sellers out there who will swap your work for equity in the property for the repairs.

You can get a house with No Bank Qualifying here:

http://www.scbuyshouses.com/forms/customform.cfm?formID=32965