How to Buy a House
Many people are wondering how to buy a house in today's market. As real estate prices continue to drop, many options exist for purchasing homes at reduced prices. From foreclosure and bank owned homes to short sale real estate and newly constructed houses, buyers have a plethora of properties to choose from.
The best way to determine how to buy a house is by conducting research on the various properties and financing options. Another good option is to enlist the help of a real estate agent. Realtors can help buyers locate properties that offer desired features by searching MLS databases consisting of thousands of homes for sale.
Real estate agents can be helpful in finding the perfect home, but other options exist for locating exceptional real estate deals. This is particularly true for buyers with poor credit and lack of sufficient down payment.
Understanding how to buy a house with bad credit is at the top of the list for many buyers. One option is to locate sellers offering rent-to-own houses. This option allows buyers to contribute a portion of rent money toward purchasing the home. Rent-to-own contracts usually last between two and five years.
During this time buyers are given the opportunity to rebuild their credit and establish a track record of making rent payments on time. Buyers are able to lock-in the purchase price and build equity in the property. When the contract expires buyers can obtain a home mortgage for the remaining balance.
Another way to buy a house with poor credit is through the use of seller carry back mortgages. This type of real estate transaction involves the seller to act as the mortgage lender. Most sellers who offer this type of financing generally carry back a portion of the purchase price and require buyers to obtain traditional financing for the balance.
In essence, the buyer will have two mortgages on the property. If the seller carries back 20-percent of the purchase price, buyers improve their chance of obtaining loan approval because it appears as if they are buying the house below market value.
Seller carry back mortgages typically last between three and five years. Buyers provide a small down payment to the seller and pay monthly payments for the duration of the contract.
Seller carry back financing is a good option for buyers with poor credit. Similar to rent-to-own contracts, seller carry back grants buyers the opportunity to remove negative credit or establish credit so they can obtain financing when the contract expires.
Distressed properties are becoming a popular choice for people who want to buy a house below market value. Distressed real estate includes foreclosure, bank owned and short sale homes. Foreclosure homes are sold through public auctions and bidders must be prepared to take possession of the property once their bid is accepted.
Bank owned homes are foreclosure properties that did not sell through auction. These properties are usually priced higher than foreclosed homes; however, once the bank takes possession the property has a clear title.
Short sale homes are properties which mortgage lenders have agreed to allow the borrower to sell for less than is owed on the mortgage note. Borrowers must sell the home in order to avoid foreclosure. Short sale real estate is often sold at 20- to 30-percent below market value.
These are just a few ways to buy a house at discounted prices. By taking time to become educated about the various types of real estate and financing options, buyers can save several thousand dollars and obtain instant equity in their newly purchased property.
We invite you to learn more about how to buy a house and various financing techniques in our home buying article library. We offer hundreds of articles on a variety of real estate topics including first time home buyer programs, tips for buying real estate with less than perfect credit, and real estate finance options.