Need some advice on this one... - Posted by Cappy_ROK

Posted by TH on May 13, 2005 at 07:06:16:

First off thank you for serving in the Military and GET BACK HOME SAFELY! Now
for the meat and potatoes: It looks as if the math is right, but you need to do your DD on
this house i.e.: Inspections, cost to correct any problems, environmental issues, mold,
termites, structure, heat and air, windows etc… If you still feel good about this property I
say GO FOR IT! Remember if you live in the house the number of years required by
Uncle Sam you can recoup all of the capital gains free and clear when you decide to sell!


Need some advice on this one… - Posted by Cappy_ROK

Posted by Cappy_ROK on May 12, 2005 at 23:16:21:

Hello all,

First of all, let me explain that I’m in the military and have been stationed overseas for the past 2 years. I am coming back to the US in about two weeks (woo hoo!) and I’m looking for a house in the town just outside where I’m being stationed next. That being said, I have no first hand information about the property, only what I have been able to glean from the internet. Am I being too anxious or am I on the right track, with regard to a property I found? Here are the details and what I was thinking?

I found a 3/2 that I would like to live in. It?s a bank foreclosure that has been on the market for almost a year. The 2004 tax records have it assessed at $59,300 and the asking price is $42,000. The bank took it back for $58,440, but apparently willing to take a loss on it because they are only asking 42k. I would like to live as inexpensively as possible, so Im not as concerned with flipping it later or capital appreciation. Even at 42k with 20% down over 30 years at 6%, and $818 annually in property taxes, I’m looking at $269.61 PITI which is right up my alley! I’m thinking of offering the bank cash (let?s say 30k) and if it?s accepted, buy it. Since the 30k would take a huge chunk out of my savings that I would like to keep, I’m thinking I could get it appraised and put a first mortgage on it in order to get my money back. Even if the appraisal were to come back at the previous tax value of $59,300, at 75% LTV I should be able to get a loan for $44,475 which will allow me to recoup my 30k plus an additional $14,475 in cash and $14,825 in equity. What if anything am I doing wrong? What haven’t I taken into consideration other than the condition of the home, which I don’t know yet because I’m overseas? Should I negotiate through a realtor or contact the bank directly? Admittedly I’m extremely anxious to get things going so am I missing something? Any advice or suggestions would be greatly appreciated.

Re: Need some advice on this one… - Posted by Natalie-VA

Posted by Natalie-VA on May 13, 2005 at 07:31:13:

Cappy - thanks for protecting us.

If the house is listed with an agent, go through the agent. Actually, if you are not familiar with the area, it would be a good idea to get your own buyer’s agent. The seller pays their commission and you would have someone to teach you about the area. Going into a town you’re not familiar with and buying the first house you see (that no one else wants) might not be the best investment.

Also, keep in mind that once you buy it with cash, any financing you get afterwards would probably be considered a cash out refi. Until you own it for 6 months or more, most lenders will base your new loan on the purchase price, not the appraised value.

Good luck!

What area are you moving to?