Elimination of Broker fees

[sara]

I am in the market to buying another home. I currently own a condo in washington dc. There are many people explaining to me that I should purchase another home and rent this one out. What are your thoughts/views on that?

How can I do that with little or or no money to put down on the next home?

Next, I noticed that there are many fees the buyer has to deal with at settlement. A co-worker explained to me the fees can be worked out where you can get a 2nd mortgage to eliminate the mandatory insurance fees, and some of the other fees can be waived.

Can someone explain this to me and is this possible?

[qksalerltr]

you can ask that the seller pay your CC, so it would really roll into your mortgage. i did this when i bought my first house, and did it again with our second. i didn't get my RE license until after we bought our second home.

[sara]

Kassie,

Thank you for your response, I am not sure in this hot market if any one is willing to pay the CC except investors.

[Falcon Living]

As far as insurance is concerned, yes you can buy a second mortgage but the second mortgage can be a lot higher interest rate than the first one dependent on your circumstances

[sara]

Thanks for your input falcon living

[Falcon Living]

Can bother me anytime with any questions on real estate and you are welcome.

[kensmith]

There are many ways to get into a home with no money out of pocket. The options become much less in markets that are VERY hot as sellers just don't have to deal with 100% financing buyers (they are much more likely to have issues with their loan).

Something to think about is how much your current home has increased in value. If you sell it now as your primary residence there will be no taxes to be paid. If you wait and rent it out for a few years you will owe taxes on the full amount of the appreciation fromt he day you purchased it. You will also be paying a higher interest rate on your new home with a low down payment if you don't sell. The worst part is many homes don't make good rentals, they are either way to nice to be a rental, not in an area where rentals do well, or the value is so high that renting it just doesn't make much sense. (as for the tax info talk to you accountant and don't take this as tax advise)

You might do much better selling your current home, buying your new home. Then taking an 2nd mortgage and purchasing a rental if you really want to start being a landlord. This can only be decided with a lot more facts than are in front of me, but you do need to think about it. Also i would strongly suggest talking to your CPA about the tax issues that I brought up, this one mistake costs people a lot of money.

[sara]

There are many ways to get into a home with no money out of pocket.

Really how? I can't imagine that.

[kensmith]

There are more than enough loan programs that will cover everything for starters. Then there is the option of the seller kicking in some money for closing costs along with a 100% loan. From there the ways become more complex and a little to hard to explain over a forum.

Just know that an experienced agent can put you into a house with no money out of pocket. The rates may not be the best and your credit can't be really bad, but you can do it. Really would suggest having at least the closing costs in your own funds as it will make things much easier and will help keep the interest rates lower.

[Boston Condo Guy]

If you sell a house which has been a personal residence in 2 out of the previous 5 years and is also used as rental property at the time of sale, you may be eligible to exclude up to $250,000 (up to $500,000 per married couple), and may also be eligible to defer any excess gain using a like-kind exchange under Internal Revenue Code Section 1031.

As Ken mentioned, talk to an attorney, or accountant on the specifics.