I've been helping First Time Buyers for 23 years as a mortgage professional and I will tell you what I have always told my clients here in New York: If you are a First Time Buyer, steer clear of foreclosures and short sales.
Foreclosures are someone else's headache. The home probably has not been well-maintained and you're a First Time Buyer adjusting to paying a mortgage. Do you really want to walk in the door to someone else's deferred maintenance that YOU will have to pay for? Also, if you're thinking there are deals to be had in terms of lower prices, mostly those "deals" go to professional investors who can pay cash, negotiate hard with a Lender, and close fast.
For Short Sales, my attitude of late is that First Time Buyers should steer clear. Short Sales tend to be a better deal for the homeowner than for the Buyer. You'll wait MONTHS for the homeowner's Lender to approve the short sale; maybe as long as Six or Seven Months. Meanwhile, you're stuck in a contract to buy that home. I closed a short sale recently with a Buyer who, after seven months said this at the closing table, "I don't even want this house anymore."
And he didn't even get the "deal" on price he thought he was getting! The house appraised for only slightly more than he paid for it at the short sale price. He walked into this deal thinking he was buying a home for $100,000 less than it's value. In the end that wasn't the case.
There are plenty of motivated Sellers with their homes listed on your local MLS. Go find a good Local Mortgage Banker, get prequalified, then find a great, experienced Realtor, and buy the home you want at the price you're willing to pay.
PowerHouse Solutions, Inc.
1010 Northern Blvd. Suite 234
Great Neck NY 11021
Licensed Mortgage Banker â€“ NYS Dept. of Financial Services
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An FHA loan should be acceptable to the bank that is selling short but you will have to wait quite some time to find out, in most cases. The seller's bank takes terms, as well as price, into consideration when making a decision on whether to accept a shortsale.
Shortsales work like this: An offer is made to the homeowner and is accepted or denied by the homeowner, since the homeowner still owns the home. If accepted by homeowner, the buyer and seller then go into contract and the contract is sent to the bank for approval (or denial). It can take months for the bank to make a decision on whether they are going to take a reduced amount on the seller's loan.
Keep in mind, after months of waiting for an answer, if the bank accepts the amount agreed upon by the buyer and seller, they usually want to close immediately. The pitfalls of a shortsale are the time spent waiting for a decision and the fact that you need to go forward with your loan application process even before that decision is made. You will be laying out money for the application, appraisal, engineer, etc. and there is a chance that the bank might not accept the amount. There is also the chance that you will lay out money to extend your mortgage commitment if the date on that commitment expires before you have a decision from the bank.
There are no extra closing costs when buying a shortsale home, for the buyer. As a matter of fact, if you apply to the same bank, depending on the bank, you can save money on your closing costs.
If you have any further questions, please fell free to contact me: http://homesiterealty.net
I am available if you would like to speak to me in reference to this.
Licensed Salesperson in New York and New Jersey
By the way using the same lender as the currrent owner does not help. There is someone that thought the same thing and was trying to make it easy. The lender, sellers side has an appraisal that is 12,000.00 higher than the same lender buyers side. No full purchase loan because the property did not appraise for full value and the lender sellers side will not approve a lower price!
Welcome to the world of short sales!
On Your Team.