Sunrise Homes & Renovations, Inc.

Buying A Home In Foreclosure

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Buying A Home In ForeclosureForeclosure is a process that happens over many months. There are various opportunities to acquire real estate that is in a different stage of foreclosure, including before the foreclosure process completes. This short guide identifies the different stages and the opportunities that may exist to acquire a property at a discounted price.

Get The Money Lined Up First

To acquire a property at any part of the foreclosure process requires cash or pre-approved credit. Have the full amount of cash available to pay for the transaction or have a recent pre-approval letter from a reliable lender. The letter shows the amount of mortgage financing available and approved for buying a foreclosure.

Pre-Foreclosure

Before a lender forecloses on a home, to take legal possession of it, they must go through a legal process filed with the courts. All those legal filings are public records.

The borrower, who is in default on the loan, gets a legal “Notice of Foreclosure” that gives a date when the foreclosure will occur. There are subscription services that collect these dates from the court records and assemble a database of information about the properties coming up for foreclosure.

Up until the foreclosure date, it is possible for the homeowner to make a deal to sell the home, which pays off the lender and that stops the foreclosure.

Sometimes the existing loan can be acquired and the past-due payments brought up to date and that is all that is needed to satisfy the lender. In other cases, the outstanding loan must be paid off entirely or refinanced by the new owner.

To find an attractive deal in this stage of the foreclosure, a real estate investor looks for a property that has significant equity and the loan(s) on the property are far below the market value of the property.

If the home continues to foreclosure then the existing owner will lose all the equity they have in the property. This makes the owner very motivated to sell the property at any price, even at a steep discount, which helps them to not lose everything.

Foreclosure Auction Sales

Some lenders immediately put a property up for auction right after foreclosure. An investor with an interest in these foreclosed properties, bids with other bidders at the auction. The highest bid wins.

All that is needed is to get on the mailing list to be informed of upcoming auctions and have a cashier check in hand for the required deposit at the auction to be able to bid.

REO Properties

Other lenders take ownership of foreclosed properties and then sell them off through authorized broker/dealers who work for the lender. Some lending systems, like HUD, for example, maintain a public database online that shows all the foreclosed properties that are for sale and their minimum offer price.

Creating personal relationships with the bank/lending officers who manage REO properties is a terrific way to get leads. It helps to have the first chance to buy a foreclosed property, which is recently added to a lender’s REO system, that other investors may not yet know about.

Conclusion

Foreclosed properties may create significant opportunities; however, there are also serious risks when buying these properties because they are sold on an “as-is” basis. This type of investment is definitely a “buyer be aware” opportunity. It can be lucrative, yet investors need to be careful as well.

If you are interested in trying to find a foreclosed property, be sure to contact your trusted real estate professional for assistance.

Understanding the Factors That Impact Your Credit Score

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Understanding the Factors That Impact Your Credit ScoreMost consumers believe if they pay their bills on time, they need not worry about their credit score. Oftentimes, it is a rude awakening when they apply for a mortgage loan, car loan, or any revolving credit to learn they are not going to get the lowest rates available due to their credit score. This is because paying bills on time only accounts for 35 percent of your credit score. The remaining 65 percent is spread out among other factors that impact your credit score.

Credit Usage And Impact On Score

Nearly one-third, 30 percent, of your credit score is based on how much of your available credit you are using. For example, if you have combined credit available of $100,000 and you use $90,000, you will suffer a decline in your credit score. Those consumers who have similar credit lines and are using $9,000 will get a slight bump in their score.

New Credit vs. Old Credit

We seldom think about how long we have held a line of credit open. However, some consumers “exchange” credit lines for other credit lines due to special offers made by credit card companies. This is not necessarily a good idea since 15 percent of your credit score is determined by the age of your credit accounts. The longer you have had an account, the better in most cases. The calculation will take all open credit accounts, take the amount of time they have been open and get an “average age”. If you have six accounts which have been open less than a year and six that have been open five years, the newer accounts will count against you in this case.

Mixing Up Credit Lines

A consumer who has only a mortgage and a single credit score will take a modest hit on their credit score versus a consumer who has multiple credit cards, a mortgage, and an auto loan. The types of credit you have will account for 10 percent of your credit score and the more varied your open credit lines, the better. While it is inadvisable to open new credit lines simply to show a variety of types, having installment loans, retail credit cards, and traditional credit cards is a good idea.

New Lines Of Credit Opened

One danger many consumers are unaware of is suddenly opening new lines of credit. For example, a new homeowner may open a new account with a home improvement store, a general retail store, and a new credit card to help them furnish and repair their new home. This could be a red flag since the credit lines are new, and there is no established history on the mortgage, or the new credit lines. Since this factor accounts for 10 percent of your credit score, you could suffer a temporary decline in your credit score.

Consumers should be aware of the factors which impact their credit score, and also be aware of the factors that do not impact their scores. Understanding your credit score may be the most important tool you have when buying a home, or refinancing your current mortgage.

Taking a good look at your credit and finding out how much financing you are pre-approved for is as important as working with a great realtor. Be sure to contact your trusted real estate professional to help you find just the right property for you. 

Pros And Cons Of Buying A Foreclosure

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Pros And Cons Of Buying A ForeclosureWhen a homeowner stops making regular mortgage payments, the bank can foreclose on the property. This means that the bank takes possession of the property in an attempt to recover the debt the homeowner owes. In some cases, the bank may try to recover this debt by selling the property at auction. In other cases, the bank will simply list the foreclosed home for sale.

Choosing to purchase a foreclosed home has both advantages and disadvantages for the buyer. Weighing these advantages and disadvantages carefully is essential.

Pros Of Buying A Foreclosure

When you decide to buy a foreclosure, you will be working with a seller that is inherently more motivated. The longer the bank owns the property, the more money they lose. For this reason, banks are often more willing to negotiate on all of the terms of the sale, including the price, closing costs and other important factors.

Buying a foreclosure also ensures that you are getting a house that is already vacant, so you can move in whenever you are ready. In addition, you can be sure that the title on the home is clear.

In most cases, you will be able to finance a bank-owned foreclosure with a mortgage, and you will be able to obtain an inspection if you want one.

Cons Of Buying A Foreclosure

Buying a foreclosure also comes with disadvantages. For example, banks usually require additional paperwork when you are purchasing a foreclosed home.

In addition, most banks will refuse to complete any repairs on the home before the purchase. Most foreclosed homes are sold as-is, which means you may have to repair some problems or do some updates after you buy the home.

Finally, because the bank has only owned the home a short time, they cannot provide comprehensive disclosures related to the property’s current condition or history. This means that you may end up purchasing a home without being fully aware of the problems you’ll need to address.

Making A Choice

Buying a foreclosure isn’t the right option for every buyer. However, if you are a careful shopper, potential benefits are available.

Before making an offer on a foreclosed home, be sure to consult an experienced real estate agent. These professionals are well-versed in negotiation and can prove to be one of your most valued assets in your home-buying experience.

 

5 Home-Buying Pitfalls To Avoid

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5 Home-Buying Pitfalls To AvoidBuying your home can be nerve-racking, especially if it’s the first time. The buying process is exciting and often complex. The chances of making a mistake are relatively high. 

In today’s real estate market where demand surpasses supply, you can’t afford to make mistakes. And this is just the tip of the iceberg.

If you are in the market to buy a house, here are five pitfalls avoid. 

Not Doing Your Homework Well 

Fortune favors the prepared in real estate. And preparedness begins with understanding your finances. A wise buyer examines assets, analyzes debts and gets finances pre-approved before jumping into the house hunt. 

Know the neighborhood well, since you’re also buying a location. It’s paramount to research about the quality of schools, upcoming zoning issues and crime level. Not all suburb spots are ideal to live in.

Picking The Wrong Mortgage 

Getting your loan preapproved puts you in a better position to negotiate. Find out how much property you can afford. Don’t rely on your bank’s internet site only. Instead, use calculators and consult with your trusted mortgage professional to find out how much you can borrow. 

It’s worth noting that what banks show they can lend can differ from what they will lend. As such, it’s imperative to choose your mortgage carefully. Compare offers from various banks or consult an independent finance broker. 

Going With The Market Flow 

Resist the temptation to flow with the market rather than your needs. The real estate market goes in cycles. There are times suitable for buyers, and times suitable for sellers. 

However, don’t gamble with your future by sitting and waiting for the right time. Once you know your budget, get your finances organized, think about your needs now and in future. Then use short term market conditions to make long-term lifestyle choices. 

Exceeding Your Budget 

Most homebuyers fall for the trap of picking more appealing properties that cost more than their budgets. Falling into this pitfall can derail your future finances. 

Although it’s human nature to yearn for more than we can afford, resist the desire. Surpassing your budget exposes you to potential financial shocks with bigger payments, property taxes and more.

Falling In Love 

If you find the perfect house, keep it to yourself. Don’t let the sellers read your emotions. If they do, they may use them against you while negotiating. 

Wise buyers know there are several homes out there, and there is one that’s right for them. If you can’t afford one or your offer isn’t accepted, keep looking and move on. 

Buying a home is rejuvenating. However, if you’re not careful, you can make mistakes you may regret later. Be sure to consult with your trusted real estate expert and trusted mortgage professional to get the best advice for your situation. 

 

 

3 Critical Tips for Buying a Home in a Short Sale

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3 Critical Tips for Buying a Home in a Short SaleYou just found your perfect home, and you feel like everything is right including the price. But, what could be wrong with your ideal home? Maybe, it is being sold as a short sale, and that could present a major challenge if you want to become be the eventual homeowner.

Short sales are different from other conventional real estate transactions since the property in question is usually listed at a price that is much lower than the amount of the outstanding mortgage debt.

Unlike a regular sale, the homeowner must obtain permission from the lender before proceeding with the transaction. Whether you are a veteran property buyer or a first-time home buyer, closing a deal on a short sale can be a challenging and stressful experience. We compiled the top three tips for buying a home in a short sale.

Consult a Short Sale Expert

First, you should consider getting help from a short sale expert who will help you identify homes that are being offered as short sales, help you determine a reasonable purchase price and also advise you on what to include in your offer to make it attractive to the seller.

Before you go for a particular short sale expert, ask them how many buyers they have helped purchase homes on short sales and how long they have been in business.

Good Deals Take Patience

Secondly, remember to be patient when engaging in a short sale deal. There is a high likelihood that most buyers will get impatient after several weeks of waiting and walk away from the deal leaving you in a strong position to negotiate.

If you understand that the initial offer on any short sale can take a long time before the lender accepts or rejects it, you will be in a better position to get a good deal since there will be no stiff competition. However, you should keep in mind that the lender might reject your offer.

Get a Full Loan Approval Early

Lastly, make sure that you get approved for a loan and not just pre-approved. Go through the trouble of getting approved if you want to stand a good chance of landing your dream home through a short sale.

Keep in mind that there will be multiple bids on the property and most of the prospective buyers will be pre-approved. Since you want to get the home at the best possible price below the market prices, being fully approved will make your offer stand out with the lender since you no longer face the risk of your financing falling apart at the last minute.

Entering into a short sale transaction will require patience and diligence. One of your best partners will be your trusted real estate professional. 

Top Tips To Get Mortgage Pre-Approval Fast

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Top Tips To Get Mortgage Pre-Approval FastWhen buying a house in a market that favors sellers, buyers must be able to move quickly. Mortgage pre-approval is critical to this. Here are some tips buyers can use to get approved fast.

1. Estimate Purchase Costs

Buyers need to know what their target purchase price is. This could speed up the pre-approval process according to Realtor.com.

If buyers have been saving for a down payment, they should also tell the lender the amount they plan to put down on the home. Again, this helps speed up the pre-approval process and ensures greater accuracy.

2. Check The Credit

Lenders will check a buyer’s credit score before offering mortgage pre-approval. Checking their own credit first and making improvements if needed could help buyers speed up the approval process.

Buyers who have credit problems may want to reach out to their lender first to see what they can do to improve their credit situation. Lenders know what strong credit looks like and may help buyers make changes that improve the credit score quickly.

Knowing credit ratings before asking for mortgage pre-approval also helps buyers know what to expect from their mortgage offer. The better the credit, the better the terms on the mortgage the bank offers.

3. Get The Paperwork Ready

If the lender has to ask for a piece of paperwork after starting the approval process, a buyer will face delays. Organizing all paperwork and delivering it with the pre-approval application should help.

Start with proof of income that will be used to qualify for the mortgage including 30 days of pay stubs and the previous two years of tax returns with W-2s or 1099s.

Buyers should then gather two months of savings and checking account documents.

Finally, anything connected to retirement, assets, or 401(k) funds needs to be included.

If the buyer has any funds deposited that were from regular paychecks or do not show in the employment and payment records, they may need to have a written explanation.

4. Present Everything Clearly To The Lender

Buyers who bring everything they need to the lender in an organized fashion should get their pre-approval letters quickly. Sometimes lenders can deliver the letter the same day that they receive the information.

That said, buyers with complications, like unusual employment structures or credit problems, may face delays. Most lenders are able to deliver an answer within a few days, even with complex applications.

Mortgage pre-approval is a critical tool in the negotiation tool box for home buyers. Doing a little homework and preparation first can help buyers get approval fast, even in a competitive market. With approval, the chances of a successful offer increase significantly.

A pre-approval in hand will make home buying a much easier experience. Your trusted real estate professional can now help you find just the right home in the right price range for you.