» Buying

What is a “Bank Approved” Short Sale?

Sarah — Mon, 28 Jun 2010 14:03:41 +0000

In Port St Lucie, we’re all mostly familiar with what a short sale entails and some buyers decide that they’d rather stay away. However, when you’re in a crunch to buy a property and there doesn’t seem to be enough foreclosures or regular sales to look through, it may benefit you to consider a bank approved short sale.

While there is no official definition of a bank approved short sale, we generally define them as follows:

A property is casually said to be approved once a previous buyer has already made an offer and the seller’s lender came back accepting or rejecting that offer at a particular price.

Here is the common dilemma: You, as the buyer, are the first to make an offer on a short sale. The seller accepts your offer, and then it’s submitted to their lender. You wait … and wait … and wait. And after what seems like forever, the lender comes back saying that they want more money.

For example, the property is listed at $100,000. You offer $95,000. The seller accepts and submits to lender. Lender comes back and wants $105,000. You walk away from the deal.

Now a new buyer comes along and sees the property is “Back on Market” at $105,000. The notes say “bank approved short sale!” and we infer this to mean that a previous buyer was the guinea pig.

While it doesn’t mean that the lender is going to be fast at re-approving you as the new buyer, we can reasonably assume that the lender will probably accept your offer if you give them what they’re looking for (or really, really close to it).

Are you considering purchasing a property in Port St Lucie?
Do you have more questions about short sales?
Give me a call directly at 772-485-3214 or contact me by clicking this link and fill out a request.

Have you made an offer on a short sale before? What has been your experience – post your thoughts below.

Credit Do’s and Dont’s During the Loan Process

Sarah — Wed, 26 May 2010 23:08:11 +0000

In a previous article I had written about new rules from Fannie Mae on credit reporting during the mortgage application process. Understanding credit reporting and scoring can feel like learning a new science. On top of that, it feels like you’re walking on a tight rope when you do apply for a mortgage because there are so many little caveats to know and remember.

To help simplify the process, here is a list provided by John Farwell, a local mortgage lender, about some “Do’s and Dont’s” for your credit after you’ve made application for your loan and have a property under contract:

Don’t Apply For New Credit of Any Kind. Including those “you have been pre-approved” credit card invitiations you receive in the mail. Every time you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately. Depending on the elements in your credit you could lose any where from 2-50 points for one hard inquiry.

Don’t Pay Off Collections or Charge-Offs during the loan process. Paying collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it through escrow and make sure that 1.) you validate the debt is yours, 2.) that the creditor agrees to give you a letter of deletion.

Don’t Close Credit Card Accounts. If you close a credit card account it willl appear that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure it is a more recent account.

Don’t Max Out or Over Charge on Your Credit Card Accounts. This is the fastest way to bring your score down 50-100 points immediately. Try to keep your credit balances below 30% of their available limit at all times during the loan process.

Don’t Consolidate Your Debt on to One or Two Credit Cards during the loan process. It seems like it would be the smart thing to do, however, when you consolidate all of your debt on to one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above in number 4. If you want to save money on credit card interest rates, wait until after closing.

Don’t Do Anything That Will Cause a Red Flag to be Raised By the Credit Scoring System. This would include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.

Do Consider Joining a Credit Watch Program. If you join a credit watch program you can check your reports regularly. If something incorrect does show up on your reports, you’ll know it immediately, and you may be able to take care of the problem before closing. Keep in mind when you pull your own reports you don’t get “dinged” for a hard inquiry.

Do Stay Current on Existing Accounts like your mortgage and car payments. One 30-day late can cost you anywhere from 30-75 points.

Do Continue to Use Your Credit As Normal. If it appears you are changing your pattern, it could raise a red flag and your score could go down.

This information was provided to me by John Farwell with Group One Mortgage. He can be contacted at 772-486-1689 if you have questions about mortgages and the loan process.

For more information about buying a home, check out these articles:

Buyers resource center

Mortgage Calculators

Info on Moving to Port St Lucie

Credit Report Double-Checks Could Delay Closings

Sarah — Mon, 17 May 2010 15:18:54 +0000

You’ve been searching for homes for a while now and you’ve finally found your dream home, made an offer, and the seller accepted! You’re smart and you’ve already got your mortgage pre-approval so now it’s time to kick it in to high gear and work towards closing.

After a week or so of ordering inspections, surveys, and providing needed documents to the lender, many of my buyers end up going out to shop for furniture and decorations for their about-to-be new home. Starting June 1st, 2010 this is going to be a big no-no.

Under the new rules, Fannie Mae and other mortgage giants are going to be doing a last-minute double-check of borrower’s credit reports. Typically you apply for a mortgage and up-front the lender checks your credit report. Now, with the new rules, the lender will also check your report just before closing to make sure that there are no new inquiries or debts reported since the original check. And if there are? Well, that could delay closing … and you better hope that these new debts won’t make your debt-to-income ratio go too high!

So what’s the best bet to avoid this dilemma? Abstinence. Don’t apply for any new debt or increase any credit limits until after closing!

Are you looking for a pre-approval in order to purchase a home? Contact me and I can recommend a few good lenders.

Other related information

Homebuyer Tax Credit Program Extended

Sarah — Fri, 06 Nov 2009 23:32:34 +0000

WASHINGTON – Nov. 6, 2009 – President Obama signed H.R. 3548 this morning, enacting into law an extension, and adjustment, of the $8,000 tax credit for first-time buyers. Among other things, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a purchased home’s cost to $800,000.

“Extending the homebuyer tax credit and expanding it to reach more homebuyers is the right thing to do,” says 2009 Florida Realtors® President Cynthia Shelton. “It is critical to maintaining the positive momentum we’ve been experiencing in the housing market and in the overall economy. Florida Realtors applaud congressional leaders for taking action to extend the homebuyer tax credit into 2010, which will help Florida families realize their dream of homeownership, improve our communities and strengthen our economy.”

Adds John Sebree, Florida Realtors vice president of public policy, “Florida residents enjoy two additional advantages. The Florida Homebuyer Opportunity Program (FHOP), created by the Florida Legislature earlier this year, still has approximately $28 million that first-time homebuyers can access and use toward their downpayment. And move-up buyers now have the ability to ‘port’ their current property tax savings to a new home.”

First-time homebuyers

Most details for first-time homebuyers mirror the rules currently in existence. The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately), and anyone who has not owned a home within three years is considered a “first-time buyer.”

• A purchase must be under contract by April 30, 2010.

• A purchase under contract by April 30 must close no later than June 30, 2010.

• After Dec. 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples; up from limits effective through Nov. 30 of $75,000 for singles and $150,000 for married couples. The tax credit phases out incrementally at each $20,000 increase in income.

• Effective immediately: The maximum home value purchased cannot exceed $800,000. Prior to the law being signed, first-time homebuyers had no limitation on a home’s cost.

Current homeowner tax credit

An existing homeowner who purchases a home may now claim a tax credit of up to $6,500. To qualify, that owner must have owned and used the same residence as a principal residence for any consecutive five-year period in the previous eight years.

• This new tax credit is effective immediately. Eligible homebuyers do not have to wait until Dec. 1 to close in order to qualify.

• Personal income limits, maximum home value, and contract/closing deadlines are the same as those for first-time homebuyers.

Long-time Florida homeowners who enjoy discounted property taxes resulting from the state’s Save Our Homes amendment qualify for property tax portability, notes Sebree. For more information or to calculate how much tax savings can be transferred to a new home, visit floridarealtors.org at: http://www.floridarealtors.org/LegislativeCenter/TopInitiatives/index.cfm

Florida Homebuyer Opportunity Program

Under FHOP, first-time Florida homebuyers can obtain interest-free bridge loans to access their federal tax credit before they complete a home purchase, enabling them to use that money upfront for downpayment and closing costs. Once buyers submit their returns to the IRS and receive their tax credit money, they repay their loans to the state.

The Florida Realtors-backed program came out of the 2009 session of the Florida Legislature. However, as part of the 2009-2010 budget year, did not become effective immediately. They tax credit extension will allow many first-time buyers to tap into the approximately $28 million in the program’s remaining funds.

While funded by the state, the money is distributed through the city and county housing offices that operate the State Housing Initiatives Partnership (SHIP) program. There is no standardized program, and each local agency may operate under different rules for distribution. For more information, buyers should contact their local SHIP office.

To find a local SHIP office, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx.

Additional changes

The tax credit extension includes other new rules, such as:

• The new law also impacts dependent purchases of homes, which weren’t addressed under the old rules.

• The new law requires a buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don’t deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won’t receive the credit without submitting proof to the Internal Revenue Service (IRS).

The homebuyer tax credit is collected as part of the normal income tax process. As a credit, it’s calculated separately from an individual’s income tax, and paid regardless of taxes owed or withheld from income. As always, however, only a tax planner can render specific advice to anyone seeking the credit. For more information on the credit, contact a tax planner or visit the IRS website at: http://www.irs.gov.

Florida Realtors will update tax credit information and clarify details when available on the Homebuyer Center, part of floridarealtors.org at: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm.

What Would You Do For $8000?

Sarah — Wed, 05 Aug 2009 17:57:38 +0000

I’ve been hearing it more and more – we want to buy now because we think the deals are going to run out!
If you’re thinking of buying a home, don’t hesitate! The prices are at the bottom, rates are low, and there’s FREE money available to first time home buyers which is going to expire the end of 2009.

What would you do for $8000?
Well, if you like shopping, why not put your savvy shopper skills to good use and join me to help you find a home that fits your budget, lifestyle, and personality.
And after you close … How about $8000 for all the hard work you’ve done?
Take advantage of it now!!

There are rumors going around that you can get the money up front before you close.
Yes, this is true! However, it’s the local governments who control how this is handled.
As I write this, Port St Lucie is working on making this happen.
Give me a call or fill out this form to talk about the latest progress and how we can put a free $8000 in your pocket!
Sarah Taylor at 772-485-3214

Have you already received the money?
Share with others in the comments section below how you put the money to good use. What did you buy? Did you make any home improvements?