That’s 49 days to find a house. A daunting task? Probably. But if you have a great team, i.e. a highly experienced Realtor and lender, working with you, the process shouldn’t be that difficult. Easier said than done you might say, but it can be done.
More information on the tax credit can be found here:
http://www.federalhousingtaxcredit.com/2009/faq.php
CLOSING DATE EXPECTATIONS WHEN BUYING BANK-OWNED PROPERTIES
Most contracts today call for 30 to 45 day closings. Most contracts also call for late fees, sometimes as high as $150/day or more, if you don't close on time.
There were new laws and guidelines enacted concerning mortgages in the last few months that have changed things.
In combination with the time-consuming challenges some buyers faced when buying bank-owned properties today, it's important to consider the potential pitfalls when deciding to agree to a closing date and the late fees, and anticipating what they could possibly cost.
First is the appraisal. Two of the biggest challenges you can face on the appraisal are value issues and repairs.
Quite often, on bank-owned property transactions, we see that the actual appraised value of the home comes in less than the agreed-to sales price.
When that happens you have four options:
- seller lowers price
- buyer pays difference
- seller and buyer split difference in some manner
- cancel (ask your agent if you have this option)
Many buyers choose the first option. This means going back to the bank for their response. That response can take sometime, anywhere from a few days to a week or more.
If the home is in need of repairs, those take time too. Allow anywhere from a few days to a few weeks, depending on the scope of the repairs.
Appraisals take a little longer to get today. The new Regulation Z federal laws that were enacted in late July made it so lenders cannot collect fees, like appraisal money, from a borrower, and therefore cannot order the appraisal, for a minimum of three business days from the date of application or the date the lender sends the disclosure package.
So, this means the appraisal is ordered about 3-4 days after application date. Appraisals can take between 5 -10 business days today so you may be looking at 8 -14 business days before you know of the value or repair challenges.
Another time-consuming factor when buying a bank-owned home is getting the payoff demand from the homeowner's association.
Here’s a typical scenario: The seller stopped making his payments and went into foreclosure. His bank took back the home. You bought from the bank. The seller owes his homeowner's association (HOA) money that he didn't pay when he missed his payments. With penalties and fines, this number could be in the $10,000's.
Your escrow company will order this HOA payoff demand. However, with the high number of foreclosures today and the amount of payoff requests on the HOA, these payoff demands can take weeks, or sometimes even months to get.
Finally, when buying a bank-owned home, you need the seller (the bank) to sign off on the closing statement. Because you are dealing with large banks, this can sometimes take a few days or even a week or more.
And none of this addresses any potential challenges with your actual loan.
Hopefully, none of these adversely affect your transaction. However, its important to understand the potential challenges and timeframes you face when buying a bank-owned home today, especially when negotiating closing dates and late fees.
RATE UPDATE:
INTEREST RATES ARE UP LAST WEEK. Rates approached a 50 year low, once again, and then bounced up slightly.
Courtesy of one of our preferred lenders, Aaron Gordon at Bank of America Home Loans, plan on the following rates:
5.000 % (APR 5.344) FOR A 30 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED OR SECOND HOME) with 1.250 points, NO ORIGINATION FEE!
5.000 % (APR 5.290) FOR A 30 YR FHA / VA LOAN, WITH .625 POINTS, NO ORIGINATION FEE!
5.625 % (APR 5.960) ON A 30 YR JUMBO LOAN OVER $417,000 with 1.000 POINTS, NO ORIGINATION FEE!
5.125 % (APR 5.450) ON A 5 YR JUMBO ARM OVER $417,000 with 1.000 POINTS, NO ORIGINATION FEE!
6.125 % (APR 6.470) ON A 30 YR INVESTOR (NON-OWNER OCCUPIED) LOAN UNDER $417,000 WITH 20% DOWN with 1.000 POINT, NO ORIGINATION FEE (720 mid score)!
5.500 % (APR 5.844) ON A 30 YR INVESTOR LOAN (NON-OWNER OCCUPIED) UNDER $417,000 WITH 25% DOWN with 1.125 POINT, NO ORIGINATION FEE (720 mid score)!
NO ORIGINATION FEE ON ANY OF THE LOANS ABOVE. NO PROCESSING FEE. NO UNDERWRITING FEE. NO ADMIN FEE. Rates subject to change until locked.
QUESTION OF THE WEEK:
"My lender asked me for a copy of my tax returns and W2's. I have no idea where to find them. What can I do?"
You can call the IRS at 1-800-829-1040. Option 1, then option 9, then option 1, then option 2. You will be speaking with a live person.
Tell the agent you want a complete transcript including W2's for whichever year you need. They will usually fax it to you within one day for free.
