Financing in Grand Junction>Question Details

Ryan, Real Estate Pro in Grand Junction, CO

Debating owner-financing or waiting 3 years to buy after short sale

Asked by Ryan, Grand Junction, CO Mon Aug 27, 2012

My wife and I are currently going through a short sale. I have heard so many different time frames as to when I can buy a house again. We moved to another state which is why we had to short sale. We couldn't sell for what we owed and couldn't rent it out to cover the mortgage. Has anyone dealt with owner financing? Do you think its worth trying to purchase a home that way over waiting the time period to buy... how ever long that might be? We really like where we live and would like to purchase a home instead of renting.

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14
You don't have to wait.....

We have a portfolio "2nd Chance" loan that allows you to buy again just one day after Short-Sale or Foreclosure. You can only have one on your credit and you will need a 20% down-payment and 660 mid FICO score. Late payments acceptable.

This loan is available in - AZ, CA, CO, DC, FL, HI, IL, MD, MT, NV, NJ, NY, NC, OR, SC, VA, and WA . Loan amounts up to $4 million +
0 votes Thank Flag Link Thu May 22, 2014
There is a site that will help you determine if you can qualify for a refinance after short sale, foreclosure, or filing bankruptcy. Check out http://www.whywaitbuytoday.com
0 votes Thank Flag Link Thu Aug 15, 2013
I had a short sale last year and my Realtor recommend http://www.cfs-mortgage.com/flex for a home loan. I am very happy to be able to purchase again.
0 votes Thank Flag Link Sun May 12, 2013
Ryan: There are a number of options which I would prefer not to discuss with you in an open format. Much of it depends on your personal info. That should not be aired here.

1) If the seller ownes the home free and clear you can do Owner Carry (very very rare in this area)
2) Wrap mortgage. Seller has a mortgage, You give a down payment. Deed is put in your name and you make his payment. Lots of dangers here.
3) Private financing. There are people out there that will loan you mortgage money for 1 to 5 yrs even with poor credit. This can cost you in high down payments and high interest rates.

Many things can change in the market over the next two years. Just as it has over the last two.

Let me know if I can help in person.

thanks
David Bochmann CCIM,GRI
0 votes Thank Flag Link Tue Aug 28, 2012
David, I agree. We are not in position to buy right now. We are currently renting a house for $1,200. It's okay but I don't really like the neighborhood (pear park). We have about 6 months left on our lease and will probably lease for another 6 months at least. I'm just trying to figure out my options at this point. I would like to buy again within the next 2 years when we have more money saved up, but was not sure if I would qualify for a conventional loan because I have heard so many different time frames. I recently found out about owner financing and thought it could be an option if we found the right house. I understand that pros and cons to owner finance. Honestly, I would like to do just do a conventional in a couple years. Any advice to achieve that? If I can get 20% plus down do I stand a better chance with the lenders considering the short sale?
0 votes Thank Flag Link Tue Aug 28, 2012
I think Sally's comments are referring more to lease/purchase than to owner financing. I agree with David that Unifirst knows their stuff, and you should let them and your agent help you with determining the right time for you to purchase again. Owner financing could be a good option, and I do not agree that the house is always overpriced. Sometimes it is, and some buyers with bad credit are willing to pay a bit more just for that opportunity to purchase!
0 votes Thank Flag Link Tue Aug 28, 2012
Dear Ryan: Unifirst mortgage is the very best that there is in Grand Junction. I don't know which agent you are with but they are all very competent. If you were told that then I would stick with that.

It sounds like right now you're really cant afford to buy and own a home with all the additional costs. You may very well want to rent a nice home for the next year to two until your situation and finances are better with the addition of the new child.

Renting is not bad. The owner is responsible for the tax, insurance, irrigation water, Most times HOA dues, and repairs. This could save you thousand a year over buying the same house.

There are many management companies who will not rent from you with a credit ding on your report. Many of them are just looking for application fees. BE CAREFUL WHO YOU WORK WITH. JUST BECAUSE THEY SAY THEY ARE REAL ESTATE BROKERS DOES NOT MEAN THEY WORK ETHICAL IN PROPERTY MANAGEMENT. Do not work with any company that makes you pay a fee up front before showing you the property. They may make you fill out an application, but DO NOT PAY ANY FEES UPFRONT. They will take your money. Make you fill out the paper work. Then tell you that they cant qualify you with a short sale or foreclosure. Even with a low credit score. Many of them will tell you that they cannot give you an answer to your questions about qualifying until they run the app. that the app cost $xxx so you have to pay up front. That is just crap to get your money. They are required to have a set standard which all applicants are judged by. They cannot discriminate. The ethical ones will tell you if you qualify with the short sale going on before they take any of your money.

Most important,,,,,, Be Patient. Don't jump back into another deal that you cannot pay for in 6 or 12 months. THERE IS ALWAYS ANOTHER GOOD DEAL OUT THERE. Agents and owners will try to tell you that this is the greatest deal on earth and you have to act now. DO NOT BELIEVE THEM. Again...... There is always another deal out there. Every day of every year life happens to people and they can no longer afford their properties. There is always another deal.

Again. If you need help. Feel free to call me and we can set down and discuss your options. I have 21 yrs. in Real Estate and 15 yrs. in property management. David Bochmann CCIM,GRI 970-250-0814

thanks
David
0 votes Thank Flag Link Tue Aug 28, 2012
Wow thanks for all the quick replies! Well I did move out here for work, and I talked to someone at Unifirst mortgage in Grand Junction and she basically told me I have to wait 3 years after a short sale to buy again.

My wife and I were keeping up on our payments for 6 months but the bank was not moving the short sale along at all. So we were at the point where we depleted all of our savings and now we have a baby on the way so we are unable to make the mortgage payment anymore. I really wanted to stay current on our payments but there was no way we could and prepare for our first baby. But now that we have missed a payment, it seems that the bank is moving along now with the short sale.

So do you think I could still qualify for a conventional loan given these circumstances. Anybody know of any good lenders local in Grand Junction I could talk to? Thank you so much for all help!
0 votes Thank Flag Link Tue Aug 28, 2012
Lots of different opinions here, so I'll go ahead and add my two cents. I've never seen owner financing work out. In this market (low inventory & high buyer demand) most sellers are able to sell and would rather do that, then rent to own. If their home isn't selling, there's a reason -- they are overpriced. If you agree to buy at a certain price in XX years, who's to say the market will be better or worse then? Will you be overpaying or underpaying? If the seller realizes they can get more $$ in 3 years, then they could back out of your contract. (if they were smart enough to write the contract that way).

Instead of looking at owner financing, focus on your short sale situation and what it means to you, your credit score and your ability to qualify for a new mortgage. If you've kept up on your payments, you'll be in a much better situation. But I've heard of people being told by their banks that in order to get the short sale approved, they have to miss payments! Makes no sense.
0 votes Thank Flag Link Tue Aug 28, 2012
I have not found that sellers offering owner financing are most likely over-pricing their property. There can be a number of factors for an owner to consider financing. A good example is a seller who wants a monthly income from their investment. There are many motivations from a seller to offer owner financing and not all of them are bad or a poor chice for a buyer.
0 votes Thank Flag Link Tue Aug 28, 2012
You are looking at several different items at one time.
First, if you had to move for work you might get a wave on the short sale and be able to purchase again right now. I would suggest you get with a Mortgage lender and do a PRE QUALIFICATION. They should be able to tell you very quick.
Second, owner carry can be tricky. Does the seller own the property free and clear of all liens? If not they will be doing what is called a WRAP MORTGAGE. These can be a problem as all loans since about 1980 have what is called a DUE ON SALE clause. This means you could put down thousands of dollars on a down payment. Then the first mortgage could call the note, ( even if you're paying your payments on time) and you would still have to go get a mortgage at a mortgage company or loose the house in foreclosure.
Third, most likely the only reason the seller is offering owner terms is because they are way over priced of the current market. They are trying to get you to pay for their bad decisions or mistakes. Be very careful.
Fourth, make sure you get a full title policy before you close an owner carry loan. There could be thousands of dollars of hidden liens they are not telling you about.
It would be best if we discussed all of these items and more in person. Feel free to give me a call and we can discuss this with all your personal facts. This will help to give you accurate advice.
0 votes Thank Flag Link Tue Aug 28, 2012
The following factors should weigh in your decision. What are the terms of your private financing versus a lending institution rates and loan origination fee. Make sure there is no prepayment penalty on the private financing in case you want to refinance when you can qualify for a lower rate with an instituional lender.
Sometimes if you put a sizable down payment that is nonrefundable, the owner will offer a better interest rate.
I would always consult with an attorney or your tax advisor before signing any papers for private financing.
0 votes Thank Flag Link Tue Aug 28, 2012
Using owner financing can be a great way to buy property. You get all the benefits of home ownership. Your interest payment is deductible. The place is your own to do with as you please.

The terms of the financing are critical, but assuming they are reasonable your cost may be similar to getting bank financing.
0 votes Thank Flag Link Mon Aug 27, 2012
Owner financing is a great option if you can find the house you like that offers owner carry terms. The only drawback that I hear of is if the seller lives nearby, they might check in on the place frequently, and let you know if you are not keeping the place up to their liking! Also some owners will escrow for taxes and insurance, to make sure they get paid, but many will not, so you will have to pay out of pocket for those when due.
0 votes Thank Flag Link Mon Aug 27, 2012
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