I've been busy the past couple of weeks sending out emails and calling everyone who has contacted us the past year or so about buying a home to make them aware of the recent changes in the housing market. Many of our clients in the past 10 years have used the Nehemiah program and otters like it to help them into a home. These down payment assistance programs have been cancelled by the new housing bill effective October 1st. At this point, we don't know if this means the transaction has to close by Oct. 1st or if it is in process by that date that will suffice. So if someone has decent credit (doesn't have to be perfect!) but no downpayment money saved, this may be their only opportunity for quite a while to buy a home. Add to this that it is still a buyer's market,with plenty of homes to choose from and low interest rates-there may not be a better time for many people to get into a home of their own.
Anyway, I hope my emails are not annoying people, I have no desire to SPAM anyone. I know many times when I receive an email I may not read it or I may delete it and then realize I need the info it contains. There is such a short window of time for people to act on this, I think it is important enough to be a little bit of a pest.
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Questions:
How does buying a foreclosed, bank-owned home work?
Is there negotiation/ wiggle room?
How much is generally needed for down payment?
Are those 0-down programs applicable, granted within that 30 day time slot you were talking about?
Just give me some info. We love our complex and there are currently 29 bank-owned properties here. Also like 21 that are up for short-sale. How does that work? Benefits? Drawbacks?
Just give me a little knowledge. We're not really in a position to buy.....but I dunno. I at least want to be informed.
Bank owned homes – you make an offer on the property just like any other home but it may take longer to get them to respond to the offer. You can make the offer whatever you wish, it does not have to be list price and they may or may not accept it, may or may not counter the offer. Generally, they will not participate in any type of seller financing, zero down programs and they will not pay closing costs. These properties are also sold “as is” and the banks usually are not willing to make any repairs. However, if a major issue shows up on inspection that would make it difficult for them to sell it to any buyer, they may be more flexible. If not, you can back out of the deal and usually get your earnest money back. Many of the bank owned, distressed homes out there are in surprisingly good shape and need little work.
HUD homes are also a good value in many cases, they are usually listed on your local MLS and you bid on them through a HUD approved broker. (Home Run Realty is a HUD approved broker BTW!) They give 1st dibs to consumers wanting a home vs. investors. In the central Indiana area, HUD is currently offering a $100 down payment program to any owner occupied buyers. This is an awesome deal!
If you qualify for an FHA loan, the down payment has to be a minimum of 3% of sales price (3.5% beginning Oct. 1st, 2008). FHA is generally the best way to go for a 1st time home buyer or anyone without a long and stellar credit history as they are a little more flexible on qualifying guidelines.
Closing costs will vary depending upon the area you are in and the type of loan program you get. A lender will need to provide you with a good faith estimate so you can get a good idea of the expenses there.
Zero down programs are still available until Oct. 1st. Some lenders are saying you must be under contract and approved for the loan by October 1st, others are saying the transaction must be closed by Oct. 1st. That is why there is no time to delay in talking to a lender and looking at properties if you have decent credit but no down payment money saved up!
Short sales can be the most difficult transactions for buyers. Banks will tell sellers they will do a short sale with them and to market the home but then not actually be looking at offers for months. Currently, I have a short sale listing where the offer has been in since July 1st and the bank has not responded to the offer. We have called, emailed, left messages and even in rare instances talked to live human beings but have not been able to get them to even give us a timeline. If you make an offer on a short sale, have a firm idea of your timeframe, how long you are willing to wait before you move on to another property.
If you live in the Central Indiana area, The Home Run Realty Team is ready to help you through the buying maze and remember for BUYERS, our services are FREE. If you do not live in our area, call us and we will still help you find a good agent in your area! You can reach us at 1-866-HOMERUN (866-466-3786) X240.
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