We just got the banks acceptance of a short sale offer, which had been at the bank awaiting approval for four months. My buyer is ecstatic. Think about it, four months to get approval and then we spend another 30 days with financing, appraisals and getting to the closing table. Five months total.
Its almost the first of March and if you write an offer on a short sale home tomorrow, March 1 and it takes the four to five months to get closed as we just experienced, if you are lucky, you are closing on the last allowable day, June 30, to get the $8,000 first time homebuyer credit from the federal government. Miss that by one day and you miss the $8,000.
Now I’m not a gambling man and don’t know if you are, but, I wouldn’t risk the chance of losing $8,000 waiting on the bank. There are thousands of homes out there for sale that only need the owner, Mr. and Mrs. Homeowner to sign and then you can close in less than 45 days from offer to move-in.
I am advising my first time home buyer clients to beware of short sales if they want to get to the finish line and collect $8,000. While I know this news disturbs all the agents with short sale listings, the main reason is many agents don’t understand the short sale process and have not done the work to get the front end work done to speed up the process.
Likewise I have a couple of buyers looking to secure the $6,500 second home buyers credit and I am advising them likewise to beware of writing a contract for a new home that has not been started, up out of the ground. With all the rain we have been experiencing there is a good chance of delays when digging a foundation, pouring concrete slabs and framing up a home.
Bottom line, there are risks with short sales where you can’t control the banks and new construction where you can’t control the weather. To be sure to qualify for the first time homebuyer $8,000 and second home $6,500 write a contract that has a great chance of closing in time and don’t ride a deal down to the end only to run past June 30.
Mark Lackey, Associate Broker with Solid Source Realty shares why home buyers need representation when purchasing a home. In today’s market more than ever, a buyer needs help navigating the market to make sure that he or she is getting sound advice.
FHA has announced sweeping changes that range from increased down payment requirement from 3.5% to 10% in certain cases, increased Mortgage Insurance Premiums (MIP) by half a percent and cutting allowed sellers contributions by half.
So you’ve decided the time has come to purchase a home. With the real estate market in decline, this can be an opportune time to purchase a property at a price well below market value. However, you will still need to make sure your credit is in order, so you can obtain a home at the best rate possible.
Your credit score will determine whether you can qualify to purchase a home, and will have a substantial impact on the interest rate you can obtain for a mortgage loan. A low credit score may mean that you will be charged high a interest rate on your loan, and in some circumstances, it may even disqualify you from buying a house altogether.
Before you even begin shopping for a home, it is a good idea to obtain your credit report from the three main reporting agencies: Experian; Equifax; and TransUnion. Lenders may use one or all of these agencies when determining if you qualify for a loan, so it’s important to know what the information is being provided by all three agencies.
You will also want to obtain your credit score from all three agencies. This score is not always included with credit reports, so you may have to purchase this information separately. Credit scores range from 300 to 800 – generally, mortgage lenders will want to see a minimum score of 650 before they will consider a loan applicant; most prefer a score of 700 or above.
If your credit score is lower than you expected, look through your credit reports for negative items, such as late payments and charge offs. If any of these items are present, make sure that they are accurate. If not, you will need to contact the reporting agencies to file explanations stating that these items are inaccurate.
If the negative items are accurate, only time and diligence will raise your credit score. In some cases, if an extraordinary event caused you to be late on credit card or installment loan payments, the lender will accept a letter of explanation detailing why these negative events occurred. However, this is the exception rather than the rule, so don’t expect the lender to be terribly willing to accept such an explanation.
Barring an explanation letter, you will simply need to re-establish a positive credit history to raise your credit score. The older a negative item is, the less it will impact your score, so paying bills on time and keeping loans current will help you raise your score relatively quickly.
If possible, you should wait until you have raised your credit score before you seriously begin looking for a home to purchase. Although there are lenders that will provide mortgage loans to applicants with poor credit, they will charge substantially higher interest rates, which can cost you thousands of dollars over the life of the loan.
At Atlanta Housing Source, we work with a mortgage company that can provide a “what if” scenario. What if I pay this balance off? What if I rearrange my balances more equally among all my credit lines? Etc. This allows our clients to know what to work on first and how long it will take them to qualify for the loan.
I just sold the same house for the second time. This home is a great home in a nice neighborhood in Gwinnett County. It is not a foreclosure, not a short sale, not a fixer-upper – it is a great home.
The first sale fell through partially because of the appraisal, but mostly because of the Buyers’ failure to follow the basic guidelines during the contract to close period.
First, the appraisal came in way too low for this great home with a lot of square footage. The appraiser used a low square footage number for the size of the home for sale and a large square foot number for the size of one of the comparables. The comparables that were used were bank owned which had deferred maintenance and therefore resulted in a low comparable value to the immaculately kept property I had listed and was under contract on.
The real reason this contact fell apart was the buyer’s agent and the buyer’s lender did not accurately communicate what was involved with buying a house. Evidently the Buyer, when initially applying for the loan listed their high hourly rate by their employer. At the time of pre-qualification, they failed to mention they only work on a limited part time basis and not full time as was assumed in the initial qualification.
In addition, neither the buyer’s lender nor their agent provided any guidance to them about what you can and cannot do during the loan process. From the time you apply for the loan until you close on the loan you should not go and change your spending habits. You should not buy anything that would change your credit score or debt to income ratios. We advise all our buyers of this so that we can have a better chance of closing on the property. Unfortunately, this Buyer chose to go out and buy something on credit terms to the tune of some $300 per month payments.
With more monthly debt from the recent purchase and less income from the part time employment the buyer no longer qualified for the loan. This was all found out 2 days before closing, after they had once extended the closing for 7 days to work out financing. Unfortunately, our Seller had packed and was ready to load the truck and go when these items came to light. The Buyer’s lender kept telling us that everything was still a go up until the very last minute.
The remedy in this situation is, the Seller gets to keep the earnest money. Not much of a concession, but at least it is a little something for their trouble. The challenge however, is the Buyer won’t acknowledge them being the party at fault for the failure to close. So the Broker holding the earnest money has to send a certified letter stating how the earnest money will be distributed. In this instance, they were clearly in default, but we have seen other instances where that is not the case. All in all, the seller would prefer to have the property sold.
We have help hundreds of people buy homes in Gwinnett, North Fulton, Cobb, & Forsyth counties. We offer a free information about credit and what can be done to improve your credit as well as explain the home buying process. Join us at The Holiday Inn Express on Shackleford Road in Duluth. Go to www.AtlantaHousingSource.com for more details.
So you’ve decided to buy a home. No matter what the economy is like, real estate remains one of the most stable, profitable long term investments available, so purchasing a home remains an excellent financial choice. But what should you do when you are preparing to buy a home?
Before you ever contact a real estate agent or begin looking at homes, you should take a critical look at your financial situation. Check your credit score with all three major credit reporting bureaus – Equifax, Experian, and TransUnion. Your credit score will affect your ability to purchase a home, and will determine the interest rate that you can obtain. A good credit score can shave one or more points off your interest rate, saving you thousands of dollars over the life of your loan.
Also, determine how much cash you have available for your down payment, moving costs, home inspection, realtor’s fees, and other costs associated with buying a home. A home purchase is often a stressful event, and you don’t want to make matters worse by going into the process without enough funds in the bank.
Once that you have established that you are financially ready to buy a home, contact a real estate agent who knows the neighborhoods you are considering. Your real estate agent will sit down with you to discuss your wants and needs, and will locate homes that may be a good fit for you.He or she will also be able to help you with many of the tasks involved with buying a home, such as scheduling a home inspection, negotiating with sellers, and setting up the closing meeting.
You should also work with a bank or other lender to obtain a prequalification letter, which tells potential sellers that you have the means to purchase the home. If you are not familiar with available lenders, your real estate agent can help you obtain a prequalification letter from a lender that will meet your financial needs.
Now that you have selected a real estate agent and obtained a prequalification letter, you can begin touring homes. Your real estate agent will likely show you numerous properties, and will look to you for comments along the way, so he or she can choose homes that fit your vision.
Once you have selected a home, you will work with your lender to obtain financing approval. Be prepared to supply documents such as income statements, three years of W2s or other tax statements, verification of employment, and bank statements. If you are a first time home buyer, your lender may also want to see one year’s worth of cancelled rent checks.
While you are working through the loan approval process, work with your real estate agent to schedule a home inspection. This will help you make sure that the home is in good condition, and allow you to estimate your repair costs after moving into the home. If there are items in need of significant repair, you can ask the seller to complete these repairs.
Finally, you will attend the closing. This meeting will be attended by you, your real estate agent, the seller and his or her agent, the loan officer, and the title officer. Here, you will complete your loan and title documents, and take official possession of the home.
