Fannie Mae offering 3.5% in closing costs to buyers until end of June 2011

Many of the distressed homes you will find on my weekly distressed property list are Fannie Mae Distressed Properties. That means that Fannie Mae guaranteed the loan originally, the home foreclosed and now they are selling it.  Many of the Fannie Mae properties qualify for the Home Path Finance program and offer special incentives for the buyer.  Until June 30, 2011, Fannie Mae is offering 3.5% in closing costs to home buyers that use the HomePath finance program.  Here is a link to the Fannie Mae site for additional information:

http://www.homepath.com/incentive/index.html

HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed.

Benefits to You, the Borrower

  • Low down payment and flexible mortgage terms (fixed-rate, adjustable rate, or interest-only).
  • Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.
  • No lender-requested appraisal.
  • No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.
  • Expanded seller contributions for closing costs allowed.
  • Available for primary residences, second homes and investment properties.
  • Many condo project requirements are waived; ask your lender for details.
  • For more information, contact a HomePath Mortgage lender or click here for the Home Buyers Guide.

This is a great program with many benefits to the buyer but you must be under contract by May 15th at the latest if you are considering this program to give the lender enough time to close the loan.   You can also use the HomePath Renovation Loan for homes that need to be fixed up first to qualify for a loan.

  
HOW DO YOU KNOW IF IT QUALIFIES?  Most of the listing agents will put this in the remarks section of their listings, but not all of them.  Ask your buyer’s agent to search for homes that may qualify and they can give you a list.

 Click here to search Statesville NC Home for Sale and other Iredell County Distressed Listings.

A few things to consider before purchasing a distressed property

I have been working with lots of buyers of foreclosed or distressed homes lately and wanted to give you some hints on how to make this type of purchase a little easier. 

First, let’s talk about Short Sale Properties:  A short sale is a home that is listed by a real estate firm for less than is owed to the bank because the currentj0427594_1 value of the home has decreased to the point that they cannot get an offer to cover all encumbrances on the home.  The seller will complete a financial package and submit it to the bank for review and advise that they want to sell the home and that it is expected to be a short sale.  Once an offer is received on the home, the bank will send out an independent person to do an appraisal or Broker Price Opinion on the home to determine current market price.  If they are in agreement, they may accept the short sale.  WARNING:  This process can take a LONG time.  Usually up to 4 months or more and the foreclosure process still moves forward.  It is a game of "Beat the Clock" and there are not guarantees.  Once accepted by the lender, you may still run into title issues on the property that have to be resolved (usually by the seller or buyer) before closing.  It is recommended to have a title report done in advance to uncover any hidden Liens or judgments.  You can get a great deal on these properties but you must be patient and work with the process.

Foreclosures:  These types of sales are much easier to do than a short sale and work the same way a regular sale works other than the seller is a bank and there are usually additional addendums to be signed that state the property is being sold in "as is" condition with no warranties and no liability by the bank.  You need to do your homework UPFRONT on these types of properties and know what you are buying.  In some instances, you can ask the bank to make repairs to enable you to qualify for financing and they may agree to complete them.  They may also pay for closing costs and even a home warranty.  Some banks will waive the appraisal fees and even lower the interest rates if you finance through them.  Work with your Realtor and know all your options. 

Financing considerations:  Please keep in mind that with ALL distressed properties, the banks will require a pre-approval letter from a lender or require you to be qualified with them directly (even though you may still choose a lender of your choice), or require proof of funds if you are paying cash.  They will consider an offer without this and earnest money.

There are lots of finance options out there such as USDA (100% financing), FHA (3.5% down payment), VA (100% for veterans plus possible lower interest rates), 203K (roll renovations into the loan and finance the whole package) as well as conventional loans.  Talk to your lender about the best option for your situation.  If you are considering a Manufactured Home, be sure to let your lender know upfront as some programs are for "Stick Built" home only.  There may also be limitations on loan amounts.  Many lenders  may not finance anything below $35,000.

So, before you begin your search, get prepared, do your homework, ask your Realtor lots of questions and make a smart buy.  Avoid any un-necessary stress by being an informed buyer.

I am here anytime you have questions – just ask!

Search for Distressed Homes in Statesville NC or surrounding areas

Continue reading A few things to consider before purchasing a distressed property

Using your IRA to invest in Real Estate

Ever thought of using your IRA to buy investment properties?

One stumbling block that many of the leads and inquiries I receive is the lack of finance options for investment property.  Many of these deals are cash buyers but investors often seek out finance programs to purchase one of the “great deals” out there on today’s market.  One option I would like to offer is using your IRA to purchase real estate.  Did you know you had that option?  Neither do a lot of people.  I had attended a training class a few years ago that gave me some great information on the subject and it has stuck with me ever since. I thought I would pass it along to you this week.  If you want an alternative to the stock market and would like to avoid financing an investment property, check out this link: 

Investing in Real Estate with your IRAj0402784   

Got you thinking yet???? 

Tom Lundstedt is an excellent real estate trainer and accountant and really knows his stuff.  I have his workbooks on purchasing and analyzing rental property and if you would like to look at his worksheets, let me know. I am happy to share (and I have permission to share with you!)  One thing you want to be sure of is this…that you have a good accountant that knows how to handle this this type of transaction on your tax return.  Make some calls and do your homework. 

There are alternatives to traditional financing, you just need the resources to find them.  Put that IRA to work for you today.