Hi all. I was checking out this forum and realized a lot of you really know your stuff so I was hoping for some advice.
My situation:
Six years ago I was a first-time home buyer who made the mistake of buying a piece of crap, and then the bubble popped. The current I owe on the home is $150,000 and the highest offer I recieved during the days on the market was $40,000. The house is unlivable as it is filled with toxic mold. I found this out a year ago after my pediatrician recommended testing due to my son’s illnesses. I moved immediately. Because I couldn’t sell the house for what I owed on it or even close for that matter, I filed bankruptcy. Now the mold-infested place is being foreclosed upon. Fortunately, I will not have to pay the $150,000 due. However, I did lose all my savings to creditors in order to get a discharge.
A year ago when I moved, I didn’t think to buy again right away. I figured I would get the place sold for about $100,000 pay the difference and start the process of buying a new home. I had no idea the place would not sell and that bankruptcy and foreclosure would be in my very near future. (Con’t with reply)
As a result I am unable to be financed in a traditional sense. So I am looking at lease options, owner finance, or land contract. I live in a house now and have the option to buy after 3-5 years with a small % of what I pay going toward the purchase price. This was all good and fine until I read about the new Homebuyer’s Buying Up Tax Credit Expansion. Apparently, a land contract qualifies for the credit, which is $6,000. So I was wondering if it was advisable to ask my seller to switch to a land contract as nothing is on paper yet. The house does need a new roof. And, if so, what are the ramifications? What are the differences? I pay $2500 a month and the negotiated purchase price is $400,000. I can’t pay more than $2500 a month. That is my 30% for housing. If I have an installment sale, don’t I have to set an interest rate and pay taxes? The calculators I have been using online put me around $2,100 a month. I know taxes are about $600 a month. So with that, the land contract would put me out of my range. Any help with this would be appreciated.
A short reply. Its infortunate that you were had on the first house, get a lawyer. Now you set yourself up for being had again by not having anything signed yet. The Land Contract idea isn’t bad but buy something you can afford. Sorry for being blunt and get some help.
Herbster
PS download the free ebook here called “owner Will Carry”.
Herbster, thanks for your reply. I did get a lawyer. The Statute of Limitations had expired. I had been there for 5 years, and I had an inspection done before buying. Nothing could be done. It was just bad luck and a horrendous market crash (I’m in Cleveland).
I don’t want to be “had” again, and that is why I don’t really mind not being tied into anything right now. However, I do know of the tax benefits of owning and with this new credit and all–it is an incentive. That is why I asked if a Land Contract is something I should think about. I downloaded the e-book and will read it. Thanks for that recommendation.
Exactly, how do you figure out what you can afford? I recently graduated and I make triple what I made a year ago. I always hear this 30% thrown around. Is that not the number? If it is that would put me at around $3750.00 a month for housing. I figured around $2500 for mortgage and taxes/insurance and the rest for utilities and repairs. I’m a way off with this number?? Thanks
I could throw a bunch of numbers at ya and talk about debt to income ratio’s but why bother. Go right to the horses mouth and visit a mortgage broker or banker and get it right the first time. Just ask them about the various types of loans available to you but don’t mention land contracts. Loans and qualifing are what these people do and they’d be happy to help. Herbster
It’s a great time to be a buyer. Prices have fallen. Sellers are willing to negotiate. The govt is offering incentives to buy. Like Herbster said, lay out your situation to a mortgage broker and see what is available to you. I suspect you’ll be pleasantly surprised.