Tired of paying rent? Dreaming about fixing up a white elephant or investing in real estate? If so, your dreams of home ownership could become reality in Riverwest, as our neighborhood offers ownership opportunities for those with incomes across the spectrum. All you need is steady employment, flexible credit, a little money to put down, and some research time. Research is key if you are a low-income buyer, because you don’t have much to spend and need to get the best deal. Take heart if this seems a little daunting; there are agencies throughout the city formed solely to help you through this process. Two good examples are the Lincoln Neighborhood Redevelopment Corporation (LNRC) and Select Milwaukee, both not-for-profits with similar missions – get more Milwaukeeans into homes. “Most people don’t know what they need to do to buy a home, and our job, basically, is to help get them started,” says LNRC representative Matt Maigatter. Groups like his walk you through the danger zones of home finance, steer you around potential money pits, and help you get the most for your dollar. Before taking any steps, though, you need to be aware of your credit situation. Credit history is an important factor in determining what kind of mortgage one gets. Find out your credit score, note any issues, and remember there is always room to improve a low score. Mike Gapinski of the LNRC says, “A lot of people say they have credit issues, and it turns out to be nothing or something that can be simply solved. We can take a look at their situation, and a lot of times it’s easy to take care of their problems, or at least they can see what steps they can take.” Once your credit is in order, apply for mortgage pre-approval. Shop around, as a few percentage points of interest on a large balance really add up over years. A good guide will find you a sensible mortgage rate, and also help you obtain any grant money you may be eligible for. “There is money out there, folks. You just have to know how to look for it,” says Barb Szymanski of Select Milwaukee. Think about your monthly payment, and remember that generally no more than 28% of your monthly gross income should go toward the mortgage. Your financial advisor can help you with this, as they will also consider potential interest rates, your down payment, and any grant eligibility. While working to secure a loan, don’t forget you’ll need some cash on hand to close a deal. You need earnest money, which is the deposit (Szymanski says 1%) made when an offer is submitted, and the down payment, a variable amount, but usually about 3% on a first-time buyer’s FHA loan. You also need to pay closing costs, usually 3-4% of the purchase price. Your financial assistant can help you get an accurate view of these costs, which can vary. With this financial power in place, it’s time to do the fun research. Take a look at the properties for sale in your area, attend open houses, and learn their market values. Ask around about local realtors and contact one who has a good reputation and does a lot of business in the area. A good realtor will know a lot about your target neighborhood, assist in your hunt for the right house, and help negotiate the best price once you make an offer. Find a home you like, but remember to get it professionally inspected. “You want to make sure it’s in good repair, so you don’t have any surprises after you buy it,” says Gapinski. “[You] want to make sure that if for some reason you’d have to sell, you would have a saleable item and make your money back.” Finally, with approval from your army of advisors, make an offer. Szymanski advises to try 3% below purchase price in a normal market, although a hot market may require a higher offer, sometimes even over the asking price. Your realtor is your tool in this negotiation, they will help feel out the situation and advise you what to bid. Prepare for rejection. After all this work, you may not get the first house you want. Keep looking, because with all your resources in place, you will soon find another potential home sweet home.
Some links & resources:
Wisconsin Housing and Economic Development Authority (WHEDA) www.wheda.com U.S. Department of Housing and Urban Development www.hud.gov Wisconsin Homes Real Estate Directory WI-realtors.com Wisconsin Realtors Association or the Milwaukee Realists Association Phone: 414/875-9921 Select Milwaukee Phone: 414/562-5070 www.selectmilwaukee.org Lincoln Neighborhood Redevelopment Corporation Phone: 414/671-5619 E-mail: hilde.dewulf@cbgmail.com LNRC staff members are available on Thursday afternoons from 3-6 p.m. at the Riverwest Coop for one-on-one talks with prospective buyers.