Legal Question in Real Estate Law in California

Re: buying house

You have a variety of possibilities, and generally what you need is real estate expertise and business or financial wisdom rather then legal advice per se. Your substantial sum of cash is a strong plus that will help to outweigh the significant negative factors of joblessness and below-standard credit.

Here are some suggestions, not necessarily in order of importance or quality:

(1) Look at whether you can bring about a significant short-term improvement in your credit scores through a judicious use of a small part of your inheritance. In other words, if you owe $5,000 total to 15 different reporting creditors, pay them all off ASAP and see what happens to your credit scores in a few months.

(2) Use your time of unemployment wisely. Go to school, take a resume gap-filling job in a different occupation, or something, to show future lenders (and employers) that you weren't sitting around lazily enjoying the inheritance.

(3) Your Zip code is from an area where $200K houses (or even close) would be few and far between. Consider some of the towns and neighborhoods around there that have lower average prices. You can always trade up later on. This might be a better long-term financial decision than taking on a hard-money loan at a high interest rate that would cause you to have to dip into capital to make the payments. Sooner or later, Bay Area home prices will go back up, but you don't want to be bled dry in the waiting process.

(4) Real estate agents are suffering mightily from lack of closed deals, and are generally much more willing to work with clients like yourself these days than back when homes were selling within days of listing. Find someone you like who is willing to represent you as a buyer's agent, and shop for something you can afford, perhaps with some low-cost seller financing rather than using a third-party lender. There are a lot of desperate homeowners facing foreclosure or, even if not in foreclosure, needing to sell in a bad market due to job relocation or needing to close a probate. Someone might carry paper at 7 - 10% on a medium-size seller carryback just so they can get on with their lives.

(5) You could also consider a lease-option so you can switch from lessor to owner status after you regain your credit and employment. Be careful about the details (paperwork) to make sure you have the rights you need at the right price. Also, don't squander the inheritance in the meanwhile. Invest it conservatively.

Re: buying house

You can buy a house for cash or nearly all cash, getting a hard money loan for the difference. There are loans available on "stated income" with sufficient downpayments, but since you don't have an income other than unemployment, you do not want to misrepresent your income.

With foreclosures so prevalent, you can talk to a broker active in foreclosure markets. You may be better able to buy properties from the bank or from the FHA or VA that are being sold in foreclosure.