BuyandClose.com Blog

Ever wonder how you get a mortgage on a home in foreclosure or a short sale?

Actually, just like you would on any other property. The fact that the property has been foreclosed upon or is being offered as a short sale has no bearing on the purchase money mortgage that you apply for to purchase the property. There are however, a few items that you should keep in mind:

1) If the property is in a state of disrepair it may not be eligible for conventional financing so a rehabilitation or construction loan may be in order.

2) The time frames of the negotiations and/or closing with the seller and/or bank can be protracted so keep this in mind when speaking to your mortgage planner about your interest rate lock and approval.

3) If the property is located in a “distressed” or “declining” market you may be required to make a larger down-payment.

And as always get pre-approved for financing first and if you already have but has been more than 30 days check with your mortgage planner and ask the he or she update your pre-approval

Every time I am pre-qualifying someone for a mortgage, I et asked the following question. “How do I feel about the future of Florida’s housing market?“

My answer is very simple: Have you seen the trailer for Journey to the Center of the Earth, when after a while that their floor broke in pieces, Brendan Fraser screams

“we are still falling !!! “

Yes indeed, this housing downturn will likely last longer than expected to rebound. Certainly, today’s economic scenario is unique and nothing from the past could 100% apply and rule out predictions for the future. We might well be experimenting the beginning of a world wide inflation or even worse stagnation. But lets go back to Florida.

This housing slump will last longer, at least in Florida, because of the high volume of foreclosures and the specific constraint in the credit markets for this particular area. So most likely, any buyer would ask himself: “ Is this the right moment to buy or shall I wait a few more months for the prices to drop even further?”

As a Realtor, you might probably be nodding and scratching your head as you read this article, but beware to the actual figures of falling prices on an environment of tightening credit, and please read very carefully this Real Life scenario.

Please click here to download the Real Life Scenario.

After reading this scenario, you could conclude that even though prices are still failing, if credit guidelines tighten or interest rates increase, the bottom line result is that the buyer’s monthly payment cash flow will remain unchanged.

Mortgage rates are a big deal when you’re buying a home.

With even the slightest uptick in rates, 30 years of mortgage payments can get substantially more expensive and one of the most substantial threats to mortgage rates is an economic event called inflation. Inflation’s influence on mortgage rates is so large that markets can get jarred on just the mention of it and that’s exactly what happened Wednesday when Fed Chairman Ben Bernanke uttered “inflation” 55 times in a 5-page speech The speech started at 2:45 P.M. ET and by 2:53 P.M., the damage was done.

Market players interpreted Bernanke’s remarks to mean that inflation may be worse that previously expected and mortgage rates moved up by 0.125 percent, or $8 per $100,000 borrowed. This equates to $2,880 in extra payments over 30 years.

If you’re actively shopping for a home loan and rapid rate movements make you nervous, consider locking in your mortgage rate today; rates have been especially jumpy all year and don’t look to smooth out anytime soon.