Can you qualify for traditional financing when buying a short sale or forclosure?

Asked by Robert, Sellersville, PA Thu Jan 28, 2010

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Steve Tennis…, Agent, McAllen, TX
Thu Jan 28, 2010
On a foreclosure, if YOU can qualify, the property still will need to qualify. With a conventional loan, there are usually not a problem. Depending on the condition of the home, it may qualify for FHA financing.
1 vote
Frank Dolski, Agent, Lahaska, PA
Thu Jan 28, 2010
The bottom line is if you qualify for the loan and meet the mortgage company's requirements, like any other loan, then you should be able to qualify. The best person to ask this question is to a mortgage company agent. Mortgage Mobility is our "In-house" company and Marc Duncan would be more than happy to answer your question. Please fell free to contact me if you have any questions.

Frank Dolski
Associate Broker
Coldwell Banker Hearthside Realtors
215-794-1070 x103
1 vote
Heather Ober…, Agent, Doylestown Township, PA
Thu Jan 28, 2010
Robert, it really depends on the condition of the property - for example, most mortgages require you to have a working stove and hot water. I've seen many foreclosures where all the copper has been ripped out of the house, missing appliances, etc. It's very difficult to get conventional financing on those types of properties. You'll need to get a construction loan, which may be a more arduous process (the one I did was a nightmare). If you're going for traditional financing, really keep an eye on the condition of the property and work with an agent who can tell you whether or not you're going to even be able to get conventional financing on it. In addition to short sales and foreclosures, I'd probably suggest that you look at estate sales, as well. Typically, these homes are habitable, but are still in need of updating and are priced to reflect that.

Take a look at the blog I wrote regarding this:
1 vote
Dan Rich, , Doylestown, PA
Thu Jan 28, 2010
Yes you can use conventional financing.

The stronger your financing the higher the chances of having a short sale offer approved. Submit (2) preapprovals with the offer and stick to well known banks. A preapproval from "" will likely get a pass.
1 vote
Tina Walsh, Agent, Doylestown, PA
Thu Jan 28, 2010
Conventional financing is the best way to go for a property that is being sold via the Short Sale process, as long as it doesn't need a construction type loan (LOTS of work), in that case, that type of loan should not be a problem, either, as long as you are financially qualified and meet credit score requirements.

Good Luck!

Tina Walsh-Wilson
Class Harlan RE
(215) 348-8111 x 24
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1 vote
Scott Godzyk, Agent, Manchester, NH
Sat Mar 10, 2012
Robert you sure can as long as the house does need to much work. It is important to be prequailified, to know what type of loan you are getting and to know what condition the house needs to be in to quailify. In a short sale you may have to wait 2-4 months for an approval but be ready to close within 30 days of teh sellers bank approving it. With a bank owned you can close in 30-45 days with no waiting for approvals, just make sure the electric, heat and water all work for your appraisal.
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Gita Bantwal, Agent, Jamison, PA
Thu Feb 4, 2010
When you are looking for a mortgage the lender bases it on your credit worthiness and also they make sure the home is worth what you are paying for it. They send an appraiser to check its value.
Sometimes foreclosed homes are in bad shape and lenders may not want to finance it.
There is an FHA insured program called FHA 203k program where you can get financing for the purchase and for fixing it up.
You should go to the HUD web site for details.
You can qualify for traditional financing for short sale and foreclosure provided your credit and income and condition of house and value are satisfactory
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Robert Pratt, Agent, Chicago, IL
Fri Jan 29, 2010
The correct answer to your question is "it depends on the unit." There
are many SS & FC's out there that you cannot buy with anything besides
cash. The selling bank will look at the strength of your offer in these
2 main areas: offer price verses current market value and number of
contingencies. Less contingencies = better; that is: mortgage,
inspection, appraisal (if you don't have cash), etc.

The best thing you can do is find an experienced agent that has seen
this type of sale through to the end. Many agents have clients who have
made offers on SS/FC but far fewer have seen them through to closing.
Otherwise you're going to be wasting your time trying to hit a bull's
eye with a blindfold on. Best of luck!
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