Helpful Mortgage And Real Estate Advice

Sorting Out Short Sale And Foreclosure Real Estate Deals

By on May 29, 2014 in Home Buying Advice

Short Sale and Foreclosure
Purchasing an existing home with motivated sellers is much simpler than looking for those deep discounts with short sales and foreclosures. Financing these special real estate cases, including new construction, takes some patience and consideration of extra paperwork. The loan approval process is slightly different, making it critical to follow the deadlines and paper trail to avoid any lending from falling through. Start by talking to your real estate professional on a regular basis to keep the purchasing wheels rolling.

Short Sale Patience

Be prepared to wait for successful financing on a short sale. Taking 7 to 120 days, short sales need several approvals throughout a banking system to be green-lit for lending and property transfer. You may clear a time frame to lock in an interest rate and closing costs, but a slow moving loan will need to be approved again after 30 days, in some cases. If possible, choose a small bank for your financing. They often have less hurdles to jump to get you in the property as soon as possible.

Foreclosure Issues

When you purchase a foreclosure, you aren’t buying from a seller, but are working directly with the bank. This fact often makes people believe that the paperwork process is faster, but it makes it slower with more departments evaluating the information. If possible, turn in your paperwork well before all deadlines to give the bankers ample time to approve the loan. Because they see your commitment to the property, they’re more inclined to move the lending through quickly and close on time. They also gain valuable interest from your loan by approving it quickly.

Property Health

If your intended property has condition issues, such as holes in walls or roof leaks, many lenders won’t allow the loan to be approved. Especially applicable to FHA loans, the property needs to be thoroughly inspected and move-in ready to be approved. However, there are rehab loans available through FHA that can be used to fix the home while you move in. Your loan officer and home inspector will need to communicate with you about possible solutions to get your financing approved.

Financing New Construction

The best loans to apply for with a new construction involved is Fannie Mae or Freddie Mac types. If you want an FHA loan, there are a number of documents you need to keep the lender confident about the property. The most important document is a certificate of occupancy, or C.O. Without this certificate, the lender doesn’t have proof that the property is ready to be occupied. You may also need termite and septic inspections, a well test, builder warranty and construction permits. All of these documents take time for approval so make them available to your lender as soon as possible.

Your loan officer becomes your best friend during these waiting periods for your loan to pull through successfully. Keep in contact with them and fill out all paperwork in a timely manner. One lost signature can force the loan back into the approval process for another 30 days.

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About the Author

About the Author: Jessica Lucas is the managing editor for Mortgage Home Base, a top real estate finance blog dedicated to helping borrowers and home buyers understand the home loan process. Follow Jessica on Google +, and share your comments here. .
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