The home buying experience can be an overwhelming experience that can be exhilarating, fun, stressful and exhausting. The process of securing a mortgage, successfully bidding on a home and completing the transaction can be lengthy, complex and involve seemingly endless professionals. Those professionals may include a buyer’s agent, a loan officer, a home inspector, title […]
3 things to look out for when purchasing a property
In real estate, there are many different types of buyers, from investors, flippers and occupants. For those buyers looking for affordable homes, those sold in a foreclosure sale, short sale, or other sale can be a deal.
Before purchasing a home, buyers must be aware of potential issues like the property not qualifying for a home loan, even though you may. When purchasing a property, look out for these three things:
Though condos can be a great way for groups of people to take their first steps into homeownership, they can be tricky to finance. When a condo is labeled as non-warrantable, it means it doesn’t meet conventional guidelines or gets flagged as:
- New construction or is not yet completed.
- Community allows short term rentals.
- A single entity or person owns more than 10% of the total number of units.
- The building owner or developer is involved in litigation.
- The total space that is used for nonresidential or commercial purposes exceeds 25%
The reasoning behind this is that these communities may not have a healthy financial standing. Borrowers can search for FHA-approved condominium projects through the U.S. Department of Housing and Urban Development.
Please note that SmartMortgage and Guild Mortgage do not currently lend for non-warrantable condos.
Fixer-upper foreclosure & short sales
Homes in foreclosure and short sales are often sold “as-is,” meaning if repairs are to be made, they will be the buyer’s responsibility. These sales are often cash-only, but buyers can finance a purchase through programs like 203(k) loans from the Federal Housing Administration (FHA) or FNMA’s HomeStyle Renovation.* When purchasing a fixer-upper home in a foreclosure or short sale, be aware that it may not be up to code. Condition issues could endanger the health and safety of your family, as well as prevent you from getting a mortgage.
When a change in financial circumstances affects a borrowers loan and causes them to fall behind in payments, there is hope. We’re here for borrowers experiencing financial hardship. We offer loan counseling and will work with you match you with the best possible workout solution for your current situation.
Workouts can include:
- Home Affordable Modification Program (HAMP)
- Formal repayment arrangement
- Informal repayment arrangement
- Forbearance/special forbearance
Homes with conflicting appraisals
Watch out for overpriced homes! In a hot market, it can be tempting to snag the home of your dreams and pay more, but your mortgage can’t be more than what the property is worth. Therefore homes should be carefully appraised by a professional appraiser. Appraisals are used to obtain an accurate description of the property and an opinion of value of that property for loan purposes. If the appraisal comes in lower than the amount you need to finance, then you may have to find a different option that works best for you.
Even in a tight market, you have options. The experts at SmartMortgage are happy to help you find the best financing option to keep you financially safe and stable.
*Program available in AK, AZ, CA, CO, HI, ID, MO, NM, NV, OR, TX, UT and WY.
Contact SmartMortgage to speak to an experienced Loan Officer
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.