heres my situation, how can i buy a home?

Question

my wife and i are currently renting and paying close to 1,000 per month. our lease will be up at the end of the year. is there a way that we can buy a home creatively? we do not have good credit nor enough for a down payment.

my wife was looking through craigs last night and saw some ads about taking over payments. the person is in foreclosure and has a bunch of back payments. the owner wants to have payments taken over. what are the pros and cons to this type of situation? 
another is a lease w/ purchase option that she found on craigs. rental price is set at one figure while the lease option rent price is significantly higher.

Jim Wineinger · Answer

I am about to place a bid on three different homes owned by the county where I live.

One, a duplex, the other two are SFH's
It is a process similar to REO's except that after the bid is accepted by the delinquent tax authority, it has to be advertised in the newspaper for a period of time (10 days here) and if no one else chooses to upbid you then you recieve the deed to the house free and clear.

The full purchase price may be required by some places at the time of the bid, but this is often a whole lot less then what is usually required for a downpayment. Each of the three properties will cost between 1,000.00 and 3,000.00 total.

The downfall is that there is almost always a lot of things to be fixed up.

Usualy the county manager, or their secretaries, will be able to give you information about these properties.

Scott Frank · Answer

If someone is in pre-foreclosure it is not as simple as taking over their payments.  You will need to have enough cash to bring the loan current and get it out of the foreclosure process.  You will also need to watch out for liens and junior loans.  Eventually, you will need to qualify for the loan to get the mortgage out of the seller's name.  
          
          Another creative method is to do a land contract.  You find a seller that wants to sell.  Ideally, they will have a low or no mortgage and don't need the cash.  These are typically stage-of-life sellers or owners of multiple properties.  You agree on the monthly payments.  The seller keeps the title until a mutally agreed on date of on-time payments usually 3 years.  This allows you to control the property at today's price and gives the seller recourse without having to foreclose should you default.  
          
          You can also do a lease-purchase which gives you the option to buy the property at an agreed upon price at some time in the future.  You will need to negotiate how much of the lease payment goes towards the purchase price when you decide to exercise the option.  This method doesn't give you control or ownership of the property until you exercise the option.

Matt Mathews · Answer

Ask yourself?  Why do you want to buy a home?  Because everyone else is or you want a place to call your own-to raise your family.  A home you can afford to own?

Now!  I only ask those questions because in today's market, with no credit or downpayment the only creative way to buy is to find a seller willing to carry a note or a Lease Option.  The monthly rent will always be higher for a lease option because the seller is crediting you part of that payment to go towards your down payment when you exercise the option to buy.  In your situation, the lease option is the most beneficial way to purchase.  If you need guidance and knowledge about how to structure the Lease Option-just PM me.

Jacque Rivers · Answer

Sam...what did you end up doing?

Alan Brymer · Answer

Personally, I think owning a home is often overrated.  You can "settle down" just as easily in a rental, and those are usually a lot cheaper up front and monthly.

David Breitzmann · Answer

As a financial conservative who views RE as a strict business venture (personal, landlording and/or etc) it's important we learn from the current landscape.

I wont even speak from the credit angle.  In terms of strictly capital you should plan the purchase with enough buffer should anything happen.  It makes no sense to purchase a home when you will have potentially far more expenses than renting with no savings.

You must have not only a down payment, but also 6 months of an emergency fund.  Do it the right way and you will avoid a tremendous amount of stress.

Sam T. · Answer

are there any pitfalls to the methods above such as the home owner getting into some trouble then getting some type of lien slapped onto the property?

jawsette,

are those tax lien sales? if so, doesn't the property owner have a right of redemption for x amount of years or something of that nature?

our credit situation is not pretty right now. we wouldn't be able to qualify for a FHA loan..

Jim Wineinger · Answer

It is similar, but different, as there are actually about 8 different type of "tax sales".

The houses that I am speaking about have already been through at least one tax sale and no one bid on them, therefore the county (who officially enters the first "starting" bid) bought the homes officially. They have been held on the county books and probably offered at several tax sales, but no investor was interested and the county still ownes them.

This is why they all usually need fixing up. Some quite a lot of work is needed.
As far as reclaimation periods, these have already passed and there is no chance of anyone reclaiming these properties. They are often referred to as "surplus lands"

Due diligence is an absolute must as there is never a guarantee of any kind to the condition of the property.
The only kinds of liens that may still exist on these is usually a lien from another governmental agency such as CITY, COUNTY, STATE, FEDERAL.

I am buying a duplex valued at 45K in its current condition for only 1K. So financing is not an option here, you must have the whole amount ($1,000.00) in order to start the bid process. If someone outbids you and you cant outbid him, then he becomes the winner of the property and from what he gives them they return your money, so no chance to loose your money, but it is tied up for the duration of the bid process.

Jim Wineinger · Answer

Sam, have you considered buying your home from the county?

Daniel Kee · Answer

I bought my house 3 years ago with zero down it was my first house and I had the owner put 5% down and went FHA. It went through without a hitch. Rules may have changed a bit but your first stop should be with an agent so they can set you up with lending options.....of course like the post above you can do land contracts and rent to own but get a lawyer to look over everything

heres my situation, how can i buy a home?

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