Are you thinking that you are going to get the next great deal on a home by buying a “Short Sale” and financing it through an FHA Insured Mortgage? Not a bad idea, however, be prepared for delays! Don’t expect to close within a two to three week window! “Short Sales” can be a real PITB (pain in the butt)! They can also be a great way to make an important investment in your family.
Why do I say this? It is really simple. A “Short Sale” is different than offering a seller less than they are asking for a home, in reality, you are offering the owner of the mortgage less than they have owed on the home. Take a look at it this way, let’s say you have a car that you financed for $2000 and your brother gave you the money to buy it and kept the title. But you don’t like the car and you find someone that will buy it from you for $1500. How do you think your brother will feel about this sale when you tell him you aren’t going to pay the other $500? Now make those numbers $250,000 and ask the bank to sell it for $190,000 and all of a sudden you can see where the problem comes in.
It doesn’t really matter that the home is only worth $190,000 in today’s market, the bank doesn’t know that until they start researching that particular home. They haven’t had a reason to do that previously, it isn’t like it is one of the foreclosures that they own. So, it takes longer. Work with someone that is ready to get the information that the lender is looking for to make their decision.
How does that affect your FHA loan application? Well, for one thing, it is nearly impossible to lock an interest rate until you have an accepted offer and just because the seller says they will take it, doesn’t mean that the bank will. So you have to wait. Locks can expire, rates can go up. The First Time Home Buyer Tax Credit may expire.
If you have questions about applying for an FHA Insured Mortgage, give me a call at 541-342-7576/541-221-3455 Cell or e-mail me. I am an experienced professional and will be happy to answer your questions.
