In the last few years FANNIE MAE has been turning down loans left and right because of the way they categorized short sales, deeds in lieu of foreclosure and actual foreclosures in the same category with their automated underwriting system. This would cause fannie mae to consider someone who short sold a home because of depressed market conditioned to be considered as high risk as someone that foreclosed on a property because of their inability to pay the monthly PITI. There is clearly as major distinction between the two but nevertheless millions have been turned down for home loans because of this and because of the fear of “buy back” from fannie mae, lenders have not been okay with manually underwriting these files.
There are millions of consumers with a 640+ credit score, 2 years of full time employment and at least 3.5% down that can finally “come off the bench” to purchase or refinance.
FANNIE MAE Update Scheduled for: November 16th, 2013
Once you’ve finished the credit repair process, the fun part begins: shopping for your new home. During your home purchase hunt, you will come across many properties that are not straight up standard home sales. Some are short sales, others foreclosures, still others, bank-owned homes. All of these can be tempting to hunt for, as they are sometimes sold for less than the price of standard sales. But, there are a few things you should know about each of these categories before you dive in:
This type of property is commonly referred to on real estate sites as a bank owned or Real Estate Owned (REO) property. The original homeowner is not involved in the sale, since the bank owns the property. While foreclosures have been, historically, priced to sell, many regions have seen the prices on these homes rise. In many cases, there is no difference between the prices of a foreclosed home and one being offered by the owner in a standard sale.
The lender/owner in an REO property does not have to make all of the disclosures required in a standard sale. The houses are sold as is, so, ensure that you have a thorough professional inspection before you commit. Many of these homes have issues because of damage done by the former owners.
Short sales involve the owner, the buyer and the lender. These homes are being sold, with the approval of the bank, for less than the previous owner owes on their mortgage. A short sale allows a seller who is upside down on the property a way out without destroying their credit.
The downside of short sales is that they can take a long time to close. The seller and lender must both agree to any offer. If there are multiple lenders, each one needs to approve the sale. You may see some short sales that are advertised as “approved” short sales. These are ones where a previous buyer’s offer was approved, but the deal fell through for some reason. But, even though another offer was approved does not mean that yours will be. If the market has improved, the bank may want a higher price than they would have accepted before.
There can also be some additional costs that must be paid in cash before the sale, such as fees that must be paid off before the title can be transferred. But, if you have the time and the patience, short sales can be worth the headache. Often, these houses will sell for far less than the market value in your area.
While home shopping, it’s important to know what you are getting into in any possible deal. Make sure you are familiar with the seller and bank’s obligations and any possible drawbacks before you get involved. Knowledge can help you protect yourself and get you a more equitable deal on your new home.
Bankruptcy Foreclosure – How long do I wait to purchase a home?
One of the most popular questions we get here at Key Credit Repair is “How long after a bankruptcy can I purchase a home?”.
The events leading up to a bankruptcy can be absolutely traumatizing but bankruptcy can provide an immediate sense of relief. Having a “clean slate” financially is a pretty wonderful thing. One of our top ranked mortgage partners, Savvas Fetfatsidis has forwarded us some pretty amazing information in regards to bankruptcy, foreclosures, short sales, etc.
So, here it goes…….
Chapter 7 Bankruptcy-2 years after discharged.
Foreclosure-3 years after completion.
Short sale-3 years after completion. P.S. If you are wondering the difference between doing a short sale and just letting your home go into foreclosure is in regards to purchasing a home might be? Well, there isn’t any for FHA financing. Only with conventional financing will you find a difference.