Distressed properties are very common in today’s housing market. Buying distressed properties like foreclosures, short sales, and real estate owned (REO) properties can prove to be great savings for the home buyer, but there are unique circumstances that arise when dealing with nontraditional real estate.
Foreclosures have been bought by many investors interested in making a strong profit from the low price point. Buyers looking for primary residences are now also tapping into the foreclosure market, especially first time home buyers that are able to finally afford a home.
Short sales are more difficult to purchase than foreclosures and can offer anywhere from 5 percent to over 30 percent discount of the market rate. Some short sales translate to incredible savings, but not in every case.
REO properties are homes that were not sold at a foreclosure auction and they have been returned to the mortgage lender. Like other distressed properties, REO’s need adequate homework completed on the property, market, and neighborhood before jumping in.
If you would like to learn more about distressed properties in the Tri-Cities Region, please give me a call.
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I recently discussed some alternatives to foreclosure for Washington residents identified by the Washington State Department of Financial Institutions (see Homeowner Alternatives to Foreclosure: Part 1). There are even more ways to avoid foreclosure and protect your home.
- Partial Claim
Your lender might be able to allow an interest-free loan from the U.S. Department of Housing & Urban Development (HUD) if you qualify.
- Pre-Foreclosure Sale
In order to save your home equity and credit rating, you can sell the home before the foreclosure sale to pay back your mortgage. This will stop the foreclosure process.
- Deed-in-lieu of foreclosure
This can be a last resort to avoid foreclosure and it involves voluntarily giving back your home to the lender. You will still lose your home, but you will have better chances of getting another loan in the future.
Visit Hud.gov to see housing counselors for the state of Washington, many of which are located in the Tri-Cities. Please give me a call if I can be of assistance to you.
Source: Washington State Department of Financial Institutions
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So many Americans are losing their homes to foreclosure, but their are alternatives to foreclosure that could help homeowners avoid losing their home and equity. The Washington State Department of Financial Institutions provides Washington residents with some options for avoiding foreclosure.
- Special forbearance
This is when your mortgage lender temporarily reduces or suspends your monthly mortgage payments for a certain amount of time. After the period of forbearance, you must make a lump sum payment or begin a repayment plan to pay back the amount that was reduced or suspended. This is a smart option for homeowners that their reason for default was temporary and will be able to resume making payments after the end of the forbearance period.
- Repayment Plan
A repayment plan might be able to be arranged with your lender where you can make your normal mortgage payments plus a portion of the amount in default. This plan might last a few months or one year. This is a smart option for homeowners that have resolved the situation that caused them to get behind on their payments.
- Mortgage Modification
Your lender may be able to let you refinance the debt and have your mortgage term extended to lessen the monthly payments to a more manageable amount. This is a smart option for homeowners that have had a reduction in their net income since beginning the mortgage.
Check back with the blog because we will be discussing more options for homeowners.
Please give me a call if you are facing foreclosure and need advice for what steps to take. Also, if you are interested in buying a foreclosure in the Tri-Cities area, please give me a call.
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Thinking of buying a home, but not sure if you can afford it? If your current financial situation leaves you wondering how you can afford a home and manage mortgage payments, you might need the help of a HUD-approved housing counselor. The U.S. Department of Housing and Urban Development provides potential home buyers with free counseling services by approved agencies located throughout the country. The Fannie Mae website provides useful information about how a housing counselor can help you prepare for homeownership or help you in your current mortgage to avoid missing payments. If you are having trouble meeting your payments each month, a housing counselor can help you prepare a budget that will help improve cash flow. If you have already missed mortgage payments and your loan has already been given to an attorney, a housing counselor can help you come up with a plan to stay current on your loan as well as discuss options with your mortgage lender.
I can always help you assess whether or not homeownership is the best option, but in some cases seeking the help of a HUD-approved housing counselor will give you the help you need. Give me a call for any help finding a housing counselor in the Tri-Cities area.
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The loans offered by the Federal Housing Administration are very flexible and you might even be approved for a loan despite bad credit. The more money you have for a down payment, the better your chances of receiving a loan. FHA also looks at job history. Mortgage 101 provides helpful advice for individuals who would like to buy a home, but have dealt with either bankruptcy, foreclosure, late payments, and liens. If you have filed for bankruptcy, you must wait two years after your discharge date to apply for a FHA loan. Be sure to have a good payment history since the bankruptcy and you can get approved for loan. If you foreclosed on your home, you must wait two to three years after the foreclosure date to apply for an FHA loan. A letter that describes why you were forced to foreclose on your home might be required by the lender. If you have had late payments in the past, you can still qualify for an FHA loan if you are able to show an overall positive credit history. As long as the lender sees credit improvements, you will be approved for the loan. If you have a federal lien, which is a security interest placed over a property to secure the payment of debt owed, you will not be eligible for an FHA loan.
Good news is that in each case you can be approved for an FHA loan if you wait the period of time required. Mortgage 101 also gives a few tips to keep a good credit score once your debts are under control.
- The most important thing for your credit is to make your payments on time. Set aside pre-addressed envelopes to mail your statements and call companies if you ever do not receive your usual statement.
- If you have a balance on a certain account, make payments early because companies add in extra interest each day a payment is late.
- Allow at least five business days for your payment to get to the right company. The postmarked date is not what companies go by, but the date that payment is received.
- Do not send cash. Send a check or get a money order and keep your receipt.
- Make a list of all your debts and when each is due. If you think you will be unable to make a certain date, contact your lender to see if another date can be arranged.
- See a financial advisor before making major financial actions, such as tapping into retirement or your life insurance policy.
- Chose credit cards with the lowest interest rates and pay them back as soon as you can.
Just because you have made mistakes in the past does not mean that you cannot have the home of your dreams! Contact me for any advice or lender recommendations in the Tri-Cities area.
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Be extra careful the next time you give out your personal information because a new form of fraud is underway and it involves bank loan officers, real estate salespeople, mortgage brokers, and anyone else that you would otherwise trust. Preston Howard, who is a mortgage broker and Principal of Rose City Realty, recently wrote on BrokerAgentSocial.com about The New Face of Lending Fraud. Howard discusses how fraudulent activity is one of the main causes of lenders filling bankruptcy or being shut down by the Federal Government.
Mortgage fraud was seen in the fairly recent “no-doc” loan cases that involved “straw buyers.” A person that had good credit would apply for a loan that did not need full documentation, be approved for the loan, and right after open a home equity line of credit (HELOC) loan or another type of cash withdraw transaction. The borrower would take the money from the HELOC loan and divide it up with the person that hired them, the straw buyer, and leave the house to enter into foreclosure. Because of the problems with no doc loans, now there are few loan options that do not require full documentation.
Mortgage fraud started to decline, but then took a turn to involve identity theft, false credit reports, and bank fraud. New cases are now involving industry insiders that you trust with your personal information and money. In New Jersey, there is a case on trial that involves over 20 individuals that are accused of fraudulent activity throughout the U.S. with over 15 properties exceeding $10 million in home value. The individuals being tried are bank loan officers, real estate salespeople, a mortgage broker, and a property appraiser. These trusted industry professionals are stealing customer identities with the help of other banking personnel. Criminals are getting creative and stealing mail, gaining social security numbers, and then applying for a loan as another person. It is disheartening that we cannot even trust the professionals we work with, but always be careful with your personal information and ask who will have access to it and why they need it. Contact me for any recommendations of professionals in the Southeast Washington area that I have worked with closely in the past that can be trusted for your real estate and banking needs.
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