Detroit Buyer's Market? How do I get a starter home??

So, I live in Metro Detroit. Houses are for sale all over the place due the auto industry. I have been renting since I graduated college. The cost of living here is pretty high so I don't have much in the way of savings. Obviously I'm throwing my money away on rent and I'm tired of it. I want a bigger place and a yard. You know...the American Dream. Is it really possible to buy a small starter home with little or no money down? And how do you deal with property taxes? Do you know in advance how much they are, can you do payment plans, can you tie the taxes into your monthly mortgage payments? I think it's time for me to become a 'real' adult.Detroit Buyer's Market? How do I get a starter home??
If you have a steady job and your credit score is good, chances are you can buy a house with little or no money down. A few things you need to know though: (1) If you don't put down at least 10%, the mortgage company can require you to carry mortgage insurance, and that can get expensive depending on the circumstances -- in most cases it adds $100.00 or less to your monthly payment (2) They changed the laws in Michigan a few years ago where they ';uncapped'; property taxes, so when you buy a house you may end up spending a heck of a lot more on property tax than the previous owner. For example, I bought a house in Redford Township in 2004 where the previous owner paid about $2,500.00 in property taxes annually, and I'm now paying over $4,000.00 in property taxes. (3) When you get the mortgage, you can set up an escrow account where you pay extra money every month that they set aside for you, and when your property taxes and homeowners insurance comes due they pay it for you. (4) Here's a barometer to see if you can afford a house: We bought our house for $155,000.00 and put $31,000.00 down -- 20% -- and our monthly payment, which includes the escrow account, is about $1,100.00. Remember, the more you finance the higher the payment, and mortgage insurance will send your payment higher also. We pre-qualified through lendingtree.com for $200,000.00, so we decided to come in way under that, and I would advise you to do the same. Good luck!Detroit Buyer's Market? How do I get a starter home??
There are a number of lenders who offer no-money-down mortgages. Now, that doesn't mean you won't have to bring any funds to the closing on your home. There are other fees involved, called closing costs, and the buyer generally has to pay for things like loan fees, pro-rated property taxes for the current year, etc. Your lender is required to give you a ';good faith estimate'; of these fees before closing.



Since this is your first home, you may be eligible for an FHA loan, which requires a 3% downpayment. However, through a number of non-profit organizations, this downpayment may be paid for you. A lender can tell you about these programs.



In Indiana, my lender collect extra funds from my monthly payment and puts these into an escrow account. The lender actually pays my property taxes and my homeowner's insurance twice a year from this escrow account. They make it very simple for us.