You’re probably going to live in the home you buy for a very long Eme, so it’s important to choose the right one. Your home should be affordable and should still be the size you need with the features and amenites you want.


Your monthly payments shouldn’t be more than you can handle. In relation to your total financial obligations, your house payments should be about 28% of your gross monthly income. Your house payments and other debts together including revolving credit, student loans, and child support, should not be more than 36% of your income.


You know what they say, “locaEon, locaEon, locaEon!” If you want the convenience of being close to work centers, parks, shopping, and transportation, you’re going to pay top prices. If you want to be in the heart of things on a small budget, you might have to settle for less space or buy a “fixer-upper.” To get more house for less money, you might have to sacrifice proximity and live a little further away from city centers.


Make a list of the things you MUST have in a home. This will help you narrow your search.
Design is also very important. Of course the number of bedrooms and bathrooms should be matched up with your family’s needs, and the layout should complement your lifestyle. Do you like to entertain? An open layout with a large dining space and lots of cabinets for dish storage might be a must for you. If you work from home, you would need a home office or a quiet work space. It’s also important to allow room for your family to grow as the years progress.Talk to your lender and find out what you can qualify for, and then talk to your real estate agent about the type of home you have in mind. Your agent should be able to find the home of your dreams where
you and your family can live your happily ever after.

Is an REO Right for You?

If you’re a home-buying newbie, you may be asking, “What the heck is an REO?” An REO is a house that is real-estate owned. In other words, it is a foreclosed home that has gone through a legal collections process that ended in the home being offered at public auction. If the home didn’t sell at the auction, the bank will turn the home over to an asset manager or mortgage clearing company so that they can
try to sell the home and get the best price possible.

It’s good for you that the REO has already been to auction and had no takers. The bank will try to sell the home for what they already have in it, plus interest and foreclosure costs, giving you the opportunity to buy the property for less than the bank loaned to the defaulting homeowner. Plus, you don’t have to pay cash like you would at an auction. If it’s listed with a real estate broker, you can get a bank loan just
like you would with any other home. In fact, the bank who owns the property may be willing to make you a good loan.

Buying an REO isn’t for the faint-hearted, but if you’re willing to work with the bank, asset manager or mortgage clearing company, you might be able to get a great deal.

Buying an REO can be chancy, though. The disadvantage of buying an REO is that you buy “as is,” which means the bank makes no guarantees. The home you want may have real issues, such as burst pipes, insect infestations, or other damage while the home sat unoccupied and unattended. In some cases, the house may have been stripped of plumbing fixtures and copper wiring or been vandalized.

Before you buy an REO, take some pictures of areas that need repair and try to interview some contractors to get an idea of what it would cost to fix them. Many homes just need cosmetic work, a little paint and cleanup. Others have extensive damage, and you may require a home improvement loan.

Talk to your lender and see what you qualify to buy. If buying the home and making repairs will cost more than the amount of your loan, will the bank loan you additional money for the improvements?

Check into the FHA 203K home repair loan. It is a conforming loan, guaranteed by the government, that allows you to make updates and repairs, but if you need to move any walls or have serious foundation issues, you may have to go with an in-house bank loan at a higher interest rate.

Buying an REO comes down to the question: can you bring the property up to neighborhood standards without spending more than current market values? You’ll have to weigh that against getting a home in move-in condition at a higher price