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I want to buy my first property but...............

By
Real Estate Agent with The Bean Group

The start of this sentence is what I am hearing a lot of lately. It seems many would be Buyer's are running into the dilemma of only meeting 2 of the 3 criteria to buy a home. What are the criteria's to buying a home, to a Realtor they are, the Buyer is ready to buy a property (this means they have made up their minds to look seriously), willing to buy a property (this means they are not going to be tire kickers), and finally able to buy a property (this means they have the credit, income and deposit to purchase).

I have been running into the situation lately where Buyer's meet the first two criteria, but they don't meet the third one. The first time home Buyer seems to lack the assets to purchase a home, now I'm not talking about putting 10% or 20% down and still having closing costs. I am speaking about not having the 3.5% to do the FHA loan or having the cash reserves to pay for closing costs and have money left over in reserves like many Banks require. I am constantly trying to find creative ways for the Buyer to get a down payment and have reserves. Do you have family members that can gift you the deposit? Do you have any 401k or IRA that you can tap into for money? In many instances the answers are NO and even when they are YES, the Buyer still has to look for help from the Seller for closing costs.

With the state of the economy being where it is, Mom and Dad are no longer able to gift their kids money to help them with the deposit and closing costs like they use to in the 80's or 90's. Even if family can assist with the deposit, Buyers are having to ask the Sellers for 2-3% in closing costs. If you get family to gift money and the Seller to pay closing costs, you have not passed all the hurtles. The last one for a Buyer would still be cash reserves, many banks and mortgage companies are requiring 6-9 months of reserves after the Buyer closes on the loan.

If you are a Buyer and looking to purchase a property what do you do? The first thing is to look at your financial situation and determine whether you need to ask family for help, if you need the help find out if your family is capable and willing to assist. You should not assume that you will get help, you need to ask before you start your property search. How much will they be able to help, deposit only, deposit and closing costs? Once you have these answers you need to get qualified by a Bank or Mortgage company with a solid foundation (Wells Fargo as an example). You also need to start saving money  NOW, especially if you think your property search won't be starting for another six or more months.

In my real estate career I bring over 10 years of experience to the table, I work to represent my Client giving 100% to them. My job is to give you my advise, experience and knowledge and to help you navigate the wonderful and frustrating world of real estate. My job does not end when you purchase your home, it just begins because I will be there even after the closing keeping in touch with you and reminding you that I am always just a phone call away.

Comments (2)

J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Tis a fact of life and a slow economy.... but having to have some skin in the game is not a bad idea

Apr 03, 2009 02:58 AM
Christopher Bonta
The Bean Group - Londonderry, NH
Realtor, Integrity and Honesty

Oh I agree with you Perrin, I think everyone needs some "skin" but unfortunately we live in a society (as of the last 10 to 15 yrs) that does not save at all and therefore now that we have changed to one that will need to it will take time for people to build up reserves.

Thanks for the comment

Apr 06, 2009 12:27 AM