Re: Financing, how does it work??? - Posted by John Corey
Posted by John Corey on May 13, 2006 at 07:22:41:
People would not make an offer to buy something if they did not think they knew what it is worth.
People should also not make an offer if they do not know what it will cost monthly to own a property. Unless you are paying all cash for the deal (real cash - not a loan) then you need to understand what you need to pay each month.
There are a lot of loan options out there. Way more than any one person can keep up with. That does not mean you can not identify a few options so you can tailor the price and the terms of the offer to match the financing that will be used.
Most of the time the best way to sort out the different financing options is to speak with a mortgage broker. Pick someone you can work with. In particular, pick someone who already invests and has worked with different investors. Someone who knows what is important to investors vs. a traditional home owner’s needs.
In a broad way you would do the same if you wanted to buy a property that needs work. You need to get quotes from contractors who can do the work before you make your offer in most cases.
The price is relative to the costs of ownership and financing is one of those costs. If you could borrow at zero percent then the offer price might be higher compared to if you have to borrower at 15%.