Looking to buy a house for the first time? You may want to use some of the strategies that investors use. This includes: what kinds of locations increase in value, what the potential is for improvements, any rental restrictions for when you’re ready to buy your second home, and the best types of investment properties for a first time home.
Let’s talk about 4 things about Subprime loans in 2023. It does feel like the subprime loans are coming back in May of 2023. I received a few new loan programs from local lenders. They call it “down payment assistance” or “closing cost assistance” programs. I’m learning about the programs to help some home buyers who might benefit from using these.
I couldn’t help comparing it to the subprime loans that were popular in the mid 2000’s before the market crash. So, I’ll explain my thought process here:
Subprime loans are higher risk loans given to borrowers with:
To make more loan programs available to borrowers who may not be qualified with traditional conventional loan qualifications.
I personally used the subprime interest-only loan as a home buyer in 2005 when I bought my first house in Portland, Oregon. I didn’t have a job at the time and I still scratch my head how I was able to get a loan without a job. It was called, “Stated income” loan. You tell the lender how much you made the last two years, and they believe you without verifying the information. As far as I know, those stated loans don’t exist in 2023.
Some of the details of these new programs that are coming up resembles the mid-2000’s subprime loans.
If a borrower is financially strong, but somehow hasn’t saved the funds for downpayment and closing costs, programs like these can bridge the gap and allow the borrower to purchase a home sooner than later. However, 620 credit score indicates that the borrower may not be financially strong indirectly. So is this a smart choice for the borrowers?
Here are some scenarios where things could go wrong for borrowers:
If you are utilizing one of these down payment assistance and/or closing cost assistance loan programs:
Make sure to understand your financial situation by educating yourself before jumping into a homeownership with programs like these. There’s no free lunch.
When you have a home inspection, what is looked at, and where? As you know, home inspection is a must do when you are buying a property. If you are buying a complete fixer to level and build a brand-new house, maybe you can skip it. Other than that, it is a crucial step in the home buying process.
From roof to foundation, it’s mostly a visual inspection (without opening up walls). Some inspectors use a behind-the-wall moisture meter, an infrared temperature gun.
You may need to hire separate inspection companies for the following:
You need to find and hire a licensed/bonded/experienced home inspector with great reviews and recommendations. As a 15-year+ realtor, I notice many repair items when I walk into a house, but a great inspector will find even more issues in any home. A great inspector can save you a lot of money and from any issues that can affect the resale value in the future as well.
If buyers want my recommendation of home inspectors, I may only recommend who I’ve worked with and who I’d hire for my own home purchase. They need to be knowledgeable, detail oriented, professional and willing to look deeper into any issues that may affect the living quality.
Q: When to do home inspection?
A: After your offer gets accepted by the seller and before the inspection contingency period ends, typically.
Q: Why do they need insurance and bond?
A: Most of the states regulate the home inspection license to standardize the qualification, knowledge level, state building codes and coverage of home inspection to make sure home inspections are done properly for buyers. Insurance/Bond portion is necessary in case of any damages that may occur during inspections, such as pipe bursting, toilet overflowing, personal injury, damage to personal property, etc.
Q: Can my father who has a general contractor’s license inspect?
A: Yes, he can, but I would not recommend it for many reasons. It may not be allowed by local real estate rules and not be considered as a professional home inspection. Also, too many potential issues related to liability, incident coverages and potentially losing leverage in repair negotiations.
Check out Oregon Home Buying Process and timeline here: https://shawn-realty.com/oregon-home-buying-process-and-timeline/
Things to know when buying a brand new home: https://shawn-realty.com/things-to-know-before-buying-a-new-home-reeds-crossing-hillsboro-oregon/
I’ve been selling real estate for the last 15 years and here’s my favorite residential real estate to invest in (in the order).
I’m a big fan of duplexes and triplexes. These tend to have the most optimal balance between price, return and appreciation. Real estate is local data specific, but you may apply this preference broadly in the U.S.
As I mentioned in the video, condos are better than renting, especially in long term.
If you’re in Oregon and want to chat about your situation, please fill out the form below.
Let’s take a quick look at the current real estate market in Beaverton, Oregon. Weekly real estate data which prepares the sellers and buyers with more up-to-date information than other delayed data. Altos Report.
With the yearly seasonality, we are seeing pending sales inching up, home buying demand is increasing. Price is somewhat flattening overall. The biggest difference makers are available tools for the buyers: rate buy-down, better negotiation leverage, loans with free refi in the future, more houses to choose from.
