Category Archives: Home Financing

How to Buy a Bank Owned Foreclosure

Considering picking up a deal on a bank owned foreclosure?  It’s a competitive market so you’re not alone.  Here are a few tips on how to make a winning offer.

SERIOUS BUYERS: Banks will only review offers from buyers who have been pre-qualified by a lender, and included a written pre-approval letter from their lender with the offer.  The stronger the pre-approval, the more negotiating power you have.
REPUTABLE LENDER: Many banks will require that you finance the property through them.  If not required, they will still insist that you work with a well known reputable lender…ask your agent for a list of lenders to choose from.

BELOW MARKET VALUE: Remember, Bank Repos are already priced well below market value, so it’s okay to offer more than the asking price to secure the property.  In most cases, it’s still a great bargain.

MULTIPLE BUYERS: Understand all Bank Repo’s have multiple buyers bidding on the property.  All offers are reviewed by the bank’s asset manager and loss mitigation departments which can delay the bank’s response to your offer.  However, immediate response to any bank counteroffer is of highest priority.  Failure to do so can result in loss of the property.

BIGGER IS BETTER: To insure another buyer does not get your home, consider offering a large deposit…the bigger the better.  Banks often choose an offer based on the size of the deposit.

KEEP IT SIMPLE: Banks love clean and simple offers, so eliminate contingencies and buy “as-is” if possible.  The fewer requests, the more likely they will be to accept your offer over the other 15 to 20 bidders.

NUMBERS GAME: You may want to submit offers on more than one property at a time to increase your chances of securing a property.  Decide in advance what is the most you are willing to offer on each property.

EXPERIENCE MAKES ALL THE DIFFERENCE: Choose an agent that has experience negotiating with banks…not all agents are alike.

TOP PRIORITY: Create a win-win relationship with your agent by insisting on a Buyer Broker Agreement for at least 30 days to insure you have their full attention as a Top Priority Client.


Short Sales: Right for You?

What is a “short sale”?

A short sale is a property being offered for sale at a price that it lower than the amount of the outstanding mortgage on the home. Since the sale price of the property will not satisfy the seller’s obligations to their lender, the seller cannot make the sole decision to accept your offer. That means the seller’s mortgage lender must also approve your offer in order for you to be able to purchase property. This process can be a lengthy and is not always successful. Some short sale lenders move directly to foreclosure instead of approving a qualified offer from a buyer. Its a tricky process and maddening  process.

When I first speak to a buyer, we talk about what is involved in successfully negotiating a short sale transaction. The primary question I ask is if they have the time and patience to wait an unpredictable amount of time for an approval of their offer? If the do not have both, the I encourage them not to consider any short sale properties. Period.

We continue to hear that lenders are shortening  the approval time  on these transactions, but I’ve done a lot of them and they continue to take months to close. IF they close at all.

Some of my buyers have gotten very good deals by patiently waiting for months for approval to buy a home.  But it’s no fun for anybody and many loose their patience and ask to begin looking for an alternative to buy.

Think about your personal situation. If you have the time and patience, and the home of your dreams is offered as a short sale – take your shot. But if you need to be in your new home on a date-certain, or if you are going to be brokenhearted if you loose that home, then don’t put yourself in short sale purgatory.  Go for the regular sale where you can negotiate directly with a seller and close in 30 days.

A title company I often use, Roberto and Associates, are experts at short sale negotiations and many of the successful transactions I’ve been involved in have been negotiated by them. In a recent newsletter, they published some FAQ’s about short sale transactions. I post them here to help you get a better handle on these tricky transactions.

Ready to buy  a short sale, or regular sale home in Fort Lauderdale/Wilton Manors? Ken Can Help!

  • ·         Do lenders of short sales prohibit “flips” and/or define a flip?

o    We have heard that lenders need to inform their investors of an intent to “flip/re-sell” for consideration to approve a short sale.  We have seen GMAC require an Affidavit to be signed at or before closing stating that the buyer has no intentions to “re-sell” the property within 90 days.  We have also seen on approval letters language stating the same.  One may want to be cautious and ask for their acknowledgement of an intent to re-sell when the file is submitted and long before a surprise with the approval letter.

  • ·         How often do we contact a lender for updates on short sales?

o    Minimally, every 3-5 days and communicate updates to all parties of the transaction (agents, seller, mortgage professionals, etc.).

  • ·         How much time after a short sale is approved are buyers given to close?

o     Short sale lenders assume that since buyers are anxiously awaiting a decision they will be ready to close soon after they issue an approval letter.   We have seen requests to have files closed in a week.  This is obviously possible for cash buyers but for those with mortgages, this can be a problem.  You would think the same lenders would know the delays with buyers getting mortgages these days but apparently they do not.  We strongly suggest that buyers getting a mortgage, submit all documents requested by their mortgage professional/lender and be as close to ready as possible.  But we also understand and expect to have to get extensions to short sale approvals.  Usually we can get an extra 1-2 weeks.  We work closely with the buyer, agents and mortgage professionals to determine a requested closing date that will yield success for all parties.  What is really important is that sellers be ready to close as short sale lenders do not like to hear that a seller can not be ready.

  • ·         What is the BPO value and can we get a copy?

o    After many years and closing thousands of short sales, we have yet to “see” a BPO.  Lenders do not provide a BPO report, unlike a conventional transaction where one can get a copy of an appraisal.  Many times lenders will not share the actual BPO value they have and will solely respond generically like “based on the BPO the offer.. or the net.. needs to be___.” 

  • ·         Why do lenders ask for the same information, like bank statements, when they got it before?

o    Sometimes by the time a loss mitigator is assigned to a file, and/or the investor is about to review and hopefully approve the short sale, the lender/servicer will ask for a more recent copy of documents.  We have even been told that it is to see if the same documents, including the ones that would not change (like tax returns) come over as previously submitted.  Our suggestion – the seller needs to promptly provide the documents their lender is requesting in order for the file to continue to move through the process

 

Closing Costs in Fort Lauderdale Still Low.

Interest rates get a lot of attention in real estate purchase discussions, but neglecting to examine closing costs can cost you thousands.

A 2011 survey of average closing costs is good news for South Florida home buyers.  The survey ranked New York with the highest average closing costs. Texas was #2 and California ranked #4. Florida ranked #12.

Our average closing costs are the same as they were in 2010. The largest increases  nationwide came from the lender fees, so cash buyers enjoy even greater benefits on their home purchase.

If you’re ready to take advantage of Fort Lauderdale’s bargain prices, low interests rates and closing costs, Ken Can Help! Let’s talk about finding your place in paradise while you can still get a great deal.

Bankrate.com’s 2011 Closing Costs Survey

You Can Still Get a Mortgage at Historic Low Rates.

Mortgage Rates are at Historic Lows Right Now.

Not everybody who can fog a mirror can get a mortgage in today’s tighter credit market.  Those days are over. But lenders are still writing mortgages to employed buyers with good credit. You’ll just need to do a lot more preparation and documentation to get your loan approved.  Here’s a step-by-step guide to getting a mortgage courtesy of  The Washington Post:

1. Start by requesting your free credit report.

You won’t receive a copy of your credit score, but it’s important to review a report from the three credit reporting agencies: Experian, TransUnion and Equifax. Make sure the information on each is correct.

If you have any late payments or recent inquiries on your report, prepare to explain the circumstances to a lender in writing. You’ll have to settle any open collections, tax liens or judgments before you close the mortgage.

“There is such a thing as not enough credit,” says John Stearns, a broker at American Fidelity Mortgage in Wisconsin. He says some borrowers only have one credit card and no other credit accounts such as car loans, cell phone bills or student loans. Ideally, lenders like to see borrowers manage at least three accounts to show they can handle credit responsibly.

2. Organize all your financial documents.

Lenders will ask for at least two months’ worth of pay stubs and bank statements. Pull out 2009 and 2010 federal tax returns, W-2’s and 401(k) statements.

If you receive alimony or child support, request up-to-date records from the court, which can take up to 90 days.

Make sure your name, address and account numbers are correct on all statements. If you recently changed your name because of marriage or divorce, make sure the update is reflected on all financial documents and that they match your identification cards. The same guidelines apply for your address if you recently moved.

3. Keep your finances simple for at least two months.

“Don’t do anything funny with your money, or it could cost you,’ “ says Pava Leyrer, president of Heritage National Mortgage in Michigan.

That means don’t make any out-of-the-ordinary deposits into your checking account, whether it’s gift money, cash from selling a car or payments from giving piano lessons. If you do, make sure to have receipts and copies of checks to give to the lender to show the source of the funds.

One of Leyrer’s recent borrowers had to write a letter to a lender explaining that a $55 bank deposit was birthday money from grandma. Another had to prove that paintings she sold at a yard sale would sell for a similar amount on eBay or Craigslist.

Another pitfall: paying off a large debt ahead of applying for a mortgage. A lender will want to know where that big sum of money came from.

Lastly, don’t overdraw your checking account for at least two months. Even if you have overdraft protection, the lender will think you have cash flow problems.

4. Document your downpayment.

That means if you received a large amount from an inheritance, request the documents from the estate trustee to prove you rightfully were given the money. A downpayment that taps money from a money market fund or other account requires a statement showing the transfer into your checking account. A 401(k) loan also must be documented.

If you receive all or part of the downpayment as a gift from a relative, you’ll be asked to produce a letter that outlines your relationship to the gift giver, the address of the property, the amount of the gift, where the giver got the funds, and a statement that the gift is not a loan.

A good rule of thumb: Any money going toward the downpayment should be in your account at least two weeks before closing, including paychecks and bonuses.

5. Show a stable work history for the past two years.

Coming out of a recession, many borrowers might need to explain any employment gaps in writing. Also, those who took temp jobs or switched careers to deal with the hard times may have to field questions from the lender and may want to wait an additional year to apply. Another red flag for lenders: a wage cut or a change in compensation from, say a salaried position to one where you earn commissions.

SOURCE:  www.washingtonpost.com, Janna Herron

Underwater Homeowners Can Shed Second Mortgages Through Bankruptcy.

Use Bankruptcy to Shed Your Second Mortgage

There is a new tool to help struggling homeowners keep their homes, while helping to correct their underwater mortgages. As many home values have fallen below the value of the first mortgage, bankruptcy is increasingly being used to discharge the second mortgage as and unsecured debt. Pretty slick. With lenders slow-walking short sales and reluctant to modify the principal value of mortgages, this may be your best way to “right-size” your mortgage obligations and save your home.

For more details on, follow the link below. If you would like to discuss your options with your underwater home, Ken Can Help!

http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=5&id=259890

Broward Home Sales and Prices Up in March

Ready to Move to Paradise? Better not wait too long.

The pace of home and condo sales in Broward County feels like 2005 again.  Multiple offers and closed sales over asking price.

That’s because the prices are more like the year 2000. But they are going up again!

  • Broward County condo sales jumped 25 percent – a five year high.
  • Single family home sales were up 8%.
  • Prices of home and condos increased over one year ago.

That’s great news for Fort Lauderdale and Wilton Manors homeowners. And a strong signal to buyers considering buying or relocating here.

If you’re ready to start looking for your piece of paradise, visit my website at www.KenHelps.com.  Use the exclusive new Map Search Feature to see the exact location of every available home in your price range.

Or contact me directly, and put me to work searching for you. Ken Can Help!

Fannie Mae Will Pay Your Closing Costs?

Fannie May Closing Cost Credit is a Great Deal.

Buyers purchasing a Fannie Mae-owned home may receive up to 3.5 percent of the final sales price for closing cost assistance if they close before June 30, 2011. Offers previously submitted (before April 11) do not qualify, and the offer is not extended to investors – buyers must use the home as their primary residence.

All Fannie Mae-owned HomePath properties are listed on HomePath.com and most include detailed property descriptions, photographs, community and school information, and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers homebuyers an opportunity to purchase with as little as 3 percent down.

Investors can also purchase Fannie May foreclosure properties, but higher down payments are required.

Ready to pick up a great deal on a Fannie Mae foreclosure? Call me today to learn how to evaluate distressed properties and how to prepare a successful offer.  Ken Can Help!

Foreclosure Auction Mistakes Can Cost a Bundle

Know Before You Go To a Home Auction.

Buying a home at a foreclosure auction is not eBay. Deceptive marketing makes the process seem easy, but it is anything but that. Unless you do your research, you may only be buying a second or third mortgage. That leaves the first mortgage in place with the right to collect what is owed to them. Simply put, you could loose the home you thought you purchased, and the money you paid at the auction. If you are not familiar with how to research auction properties, don’t take the risk. I can help you find great deals on foreclosure homes without the risk. Ken Can Help!

For more details on the pitfalls in buying a home at auction, here’s a great read.
http://www.sun-sentinel.com/business/fl-foreclosure-auction-20110405,0,5461515.story

Bank Fraud on Foreclosures Even Worse Than Thought.

Roy Oppenheim has been a clear voice in helping educate South Florida homeowners on their rights with regard to foreclosure defense.  His latest blog post, prompted by a 60 Minutes segment is worth reading. The piece shines new light on the hypocritical practice of lenders using robo-signing sweatshops to recreate and falsify mortgage documents  that were used in fraudulent foreclosure filings.  There is not doubt that the housing crash has hurt many people, and created opportunity for others. But for the lenders to be allowed to enforce their mortgages based on false documents is truly stunning.  When combined with the the activities of Wall Street that brought our economy to it’s knees, I have to ask …Why isn’t anybody in jail yet? Follow this link to read this excellent post.

http://southfloridalawblog.com/2011/04/06/the-stunning-hypocrisy-in-foreclosures-scott-pelley-interviews-robo-signers/

Lenders and Insurers Use Your Credit Score To Set Rates.

Factors That Affect Your Credit Score.

 

Special to Gay Fort Lauderdale Realtor by Marc Samet, Mortgage Planner with USCCRA.

Did you know that mortgage scores are different from automobile scores?  And they are different from consumer scores? No wonder everyone is confused… the information below will help!

Actually there are more scoring models than these mentioned above, but lets not confuse the issue anymore than it already is!  Most us are usually purchasing furniture, a car or a home, so lets stay focused on just those three.

If you are going online to pull your credit report,you are getting a consumer report and if you purchase it a consumer score.  These are NOT mortgage or automobile scores!!!

Ok so what’s the difference in all these scores?  This chart below may help you….

200-950 Consumer Scores Range

250-843 Automobile Scores Range

330-844 Mortgage Scores Range

It’s all based upon risk.  Think about it.  If you purchase some furniture, the loan is $1000-$3000 for ayear or so. If you purchase a car, its a 3-5 year loan for $10,000 – $45,000 in most cases. And your home? Well its usually 15-30 years for $50,000 – $??????.   So they weigh different parts of your credit based on what you are purchasing.

If you are trying to purchase or refinance a home,your loan professional will be pulling morgage scores. They are looking at the middle score of the three. Here is how they break down…..

334-818 Equifax

309-839 Trans Union

320-844 Experian

Where can i get a copy of my credit so you can do afree review?
The site that the Federal Trade Commission set up is at www.annualcreditreport.com This takes you to each of the 3 bureaus listed above to get a copy of yourcredit report. You can get a copy once every 12 months from each bureau (its free). You will NOT get a credit score, however they would love it if you purchase one.  You can get a consumer score from  http://www.credit.com/credit-reports/credit-monitoring/ Here you can get a tri-merge report (consumers scores) or One FICO (mortgage) score report.  You will have to pay on this site or sign up, print your tri-merge credit report and then you have 10 days CANCEL the monitoring service.

HOW MUCH ARE YOUR CREDIT SCORES COSTING YOU IN HOMEOWNERS INSURANCE AND CAR INSURANCE?  IT COULD BE OVER$1000 A YEAR OR MORE!!

I know you think I am kidding right?  Check this information out…

I wanted to find out the “rest of the story” so I called a couple of insurance underwriters in the back office and had them run some numbers for me.

First I want to point out that Car and Home Insurance scoring models are different and typically pulled via”LexisNexis”. So it’s NOT a FICO scoring model used in mortgage scoring. An automobile score can go from 250-843 while a typical mortgage scores are 350-850 range.

So i asked my undercover insiders to run a car insurance policy on a 2010 Chevy Cobalt. Same coverage was applied to a person with the best “scores” and one with the worst “scores”…..

Bad Credit Scores –  $1092.00 Annually.

Best Credit Scores – $  416.00 Annually

So I  asked my undercover insiders to run a $180,000 homeowners insurance policy. Same coverage was applied to a person with the best “scores” and one with the worst “scores”….

Bad Credit Scores –  $1377.00 Annually

Best Credit Scores – $  681.00 Annually

Did you know that your insurance company is probably pulling your credit on your annual premium date? Yep thats right, they do a soft pull (so it doesn’t affectyour scores) and check different variables to determine your new premium rates! .

Many of my clients call in and ask how much USCCRA’s sevices “cost”? My response is nothing, its an investment! Now add your interest rates on your credit cards and your car(s)loans! Then add your hazard insurane and mortgage… if you can qualify for one.

Do you view your credit reports as an OBSTACLE or an OPPORTUNITY? Contact me at 954.68.-8360 for a conversation about what you can do to create new possibilities for your financial future. For more information about the US Consumer Credit Restoration Association visit  http://www.usccra.com/site-content/about-us.html