Should I buy it?

[Shane W]

I'm 20 years old, looking to buy my first house (To live in, and eventually rent out). I'm eligible for a VA loan (1 year in the Air Force), but even though I'm "Pre-approved" for a loan, I have a feeling they'll deny the loan last minute if I go through with it, since I don't have 2 years of job experience in one field, which they said could keep me from getting a loan. Dealing with banks and brokers is giving me a headache, and I have a feeling they're going to screw me last minute. I'd prefer to skip the banks if possible, at least until I have a more solid employment and credit history and feel more prepared to secure a loan. My credit's not bad, but just being so young I don't have the stability that most banks want before approving someone for a loan.

I started looking at FSBO homes, and found one that looked promising. 73k for a 2 bed/2 bath condo, 1173 square feet in Veags.

The bad:
Not the greatest condo or the greatest neighborhood.
Currently the market rate for those units are about 50-60k, and he's asking 73k.

The good:
He owns the condo outright.
If I bought it I'd be eligible for the tax credit (Roughly 7k).
He's willing to finance it for a couple years until I refinance it through a bank loan.

If I did buy it, he's flexible. He's willing to let me put down 3-4k, then put down maybe 2k after I get the tax credit back. He'd want maybe 600-700 (Not including association fees) per month while he financed it, then when i refinanced it would be either 400 or 550, depending on if it's a 30 or 15 year loan.

Does this sound like it may be a good deal? If he's not willing to budge on the price is it still worth it? Also, is it a good idea to consult a real estate attorney to draw up the contract, or should I do the research and do it myself? Just wanted to see what you guys think.

I have been reading up quite a bit on real estate, although being a first-time home buyer I'd still not entirely familiar with the process. I know I'd have to get an appraisal and inspection, but does anyone have any guide or can provide me with a little more info on what order to do everything in? Any recommendations on a source for what contracts I'll need? Is it required to have insurance for the first year to cover appliances?

I don't want anyone to hold my hand, but after reading book after book on real estate, I feel so lost going through all the information that now that I'm actually trying to buy a house, I have no idea what to do or what order to do it in.

Thanks in advance for any help.

[Jon Holdman]

No, this is a terrible deal. Its worth $50K and you're wondering if you should pay $73K? A 5% 30 year loan $70K would have P&I payments of only $380 and he wants $600?

Lets say he charges you no interest and the $600 a month is all principle. After two years you've paid $14,400. You've put down $6000. So, you still owe $52,600 on a condo that's worth $50K (No, its not going to appreciate in the next two years. You'll be lucky if it doesn't lose more value.) Think you're going to be able to refinance?

This isn't a desperate seller. You're about to become a desperate buyer and get rooked into a horrible deal. If the units are worth $50K, surely don't pay more than that. Better still would be to find a desperate seller and buy one for $35K.