Category Archives: Financing

Posts pertaining to financing your home purchase.

Buying a Short Sale Property – Day 6

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The last few days were largely uneventful. The seller was unavailable and so was her agent, so we sat in limbo for the weekend.

We finally received another counter offer this afternoon. Although we couldn’t get everything my client wanted, we did get the important stuff. That said, we reached a binding agreement.

With a mutually agreed-upon contract, the listing agent now has everything she needs to submit a short sale package to the bank (or, in this case, banks.) This is where things get dicey. Once the package enters into mortgage lender limbo, it’s the listing agent’s job to make sure it goes where it needs to go and gets looked at. I’ll be following up liberally to make sure that happens.

Looking forward to the next step. I’ll let you know what happens.

Buying a Short Sale Property – Day 3

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We finally got a counter-offer back from the seller. Hooray!

She came back with a few different terms, but no extravagant changes. I want to protect my client’s confidentiality, so you’ll have to forgive the lack of details.

Anyway, we should be able to work something out that will make everybody happy. I’ll let you know how we respond.

After we work that all out, we ship a short sale package to the lender and wait patiently for their ever-elusive short sale approval.

Buying a Short Sale Property – Day 2

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Nothing to really report today. The seller of the property my client is going after has been in and out of the doctor’s office all day long and was unable to meet with her agent and look at our offer. Time is of the essence, but life certainly can get in the way sometimes. Looking forward to getting the contract negotiated and accepted today.

Then comes the fun part of assembling short sale packages to be sent to both of this property’s lien holders. Two lenders = two times the fun.

See you tomorrow!

Buying a Short Sale Property – Day 1

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If you were, at one time, a regular reader of this blog, you know that we’ve taken a bit of a hiatus over the past few months. Well, time to dust off the ol’ writing gloves and get back to work.

I figured, what better way to return to blogging than to write a daily chronicle of one of the more elusive processes in real estate: the short sale? In this series, we’ll follow the process from offer to close and see what really happens along the way.

And away we go…. Day 1 – July 27, 2010:

After much searching, we’ve found the perfect house. Just my buyer’s luck, it’s a short sale situation. It’s a great chance to snag a really good deal, but also a potential whirlwind of red-tape and headaches for both my buyer and me.

All fear aside on both our parts, we are going to weather the storm and get her a great house at a great price.

Details:

2:00 PM – We wrote an offer. Full price with seller paid title and 4% of purchase price towards closings costs, pre-paid expenses (taxes,escrow,homeowner’s insurance,etc.,) and discount points. 14 day inspection contingency, appraisal contingency, financial contingency. All the good stuff. We also attached short sale addenda with language that allows my client some ways out if something better comes along.

I’m all about protecting my clients and giving them plenty of
escape routes if things go south.  Make sure your agent does this too.

4:00 PM – The offer’s been sent out and we’re waiting to negotiate.

9:30 PM – The listing agent has contacted me to acknowledge receipt of the offer and will present it to her client in the morning. More to come tomorrow!

How Much Of a Down Payment Do I Really Need?

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I’ve run into this question quite a bit lately. People are wondering how much cash they need to have on hand to purchase a home.

There are a lot of misconceptions out there when it comes to down payment. Some people think you need 20%. Others think you need 10%.

What if I told you 3.5% will get you in to a house?

It really depends on which loan program you go with. If you get an FHA loan, you can put down as little as 3.5%. The disadvantage to that is that you will have to pay an up-front mortgage insurance premium. That amount is rolled in to your total loan balance. Also, you’ll pay a monthly mortgage insurance premium until you build equity in 20% of the house.

Moving up the ladder, there are conventional loans available that allow you to put 5 % down. Using this type of product, you would avoid the up-front premium, but would still have to pay private mortgage insurance until you get to that magical 20% equity mark.

Those are just a few of the various options available to home purchasers. A reputable lender would be able to sit down with you and talk about all of your options and tailor something to meet your needs.

Whichever you choose, make sure that you put enough money down to actually have a stake in your home. 0% financing is what caused all of the trouble in our housing and financial markets. Also, higher down payments = lower monthly payments, less interest paid, more money in your pocket, etc…

Take the time to plan your move. You’ll be glad you did. Contact me and we can sit down and go through your options together.

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6 Posts Worth Reading

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203k Loans – FHA's Dirty Little Secret

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No, FHA, isn’t hiding anything from you. It’s just that I don’t hear too many people talk about this program.

203k is a program offered by FHA that allows you to borrow extra money to make necessary repairs on your new home.

-> Think a few months ahead to the impending release of foreclosures onto the market.<-

Banks own so many properties right now that they don’t know what to do with them. When they finally decide to unload these properties, you’re going to see a ton of “fixer-uppers” on the market.

Foreclosures offer great opportunity to find some really killer deals. However, they are usually sold AS-IS. So, good luck getting the bank to repair anything.

Still, the great deals will be there.

Why pass up a superbly under-priced property just because it needs a little love?

Re-enter the 203k loan. Let’s look at this example: (we’ll use nice round numbers to keep it simple)

You find a home for sale that you’d like. It’s priced at $80,000 because it needs some work. In good condition, it could sell for $100,000 easily.

  • You determine that the house will need about $10,000 in repairs to get it up to speed.
  • You put in an offer on the house and get it under contract for $80,000.
  • You get two contractors to bid on the work as part of the process.
  • You apply for your loan to cover the purchase price and rehab costs. (Minus down payment and seller concessions.)
  • The bank will order an appraisal on the house. The appraiser will assess what the value will be AFTER repairs.
  • The lender works their magic. You get approved for a $90,000 loan.

Long-story short, you got yourself a home for $80,000, used a government sponsored loan program to get it up to good condition for $10,000 additional, and now you have a $100,000 valued home that you can move into and enjoy.

Ka-ching?… yes, ka-ching.

As with any government program, there are plenty of details that are case-dependent, so check out the link below.

http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

This is a great program that is really under-utilized in my humble opinion. Check it out. Get some knowledge. Talk to me.

Think about it.

Kenny Silva
Real Estate Consultant

Silva Real Estate Group
www.thesilvagroup.net

Cell:(615)336-6638
Office:(615)425-3600
Fax:(615)690-8721
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Keller Williams Realty
30 Burton Hills Blvd Suite 175
Nashville, TN 37215