“I am amazed everyday with the deals that buyers are getting on real estate in the Steamboat Springs market. The rates are at or below historic lows again, so not only are the prices right, but the resulting payments are also budget friendly. Today’s hot commodities are bank owned or short sale properties. Buying one of these properties presents a different set of challenges; here are a few tips and observations from my experience with lending on Steamboat foreclosures and short-sales.
Be prepared! If you are buying a bank owned property, the bank’s main goal is getting the property off of their books as quickly as possible. That means that the contract deadlines may be tight, giving you less time to complete the loan process. It is vital that your mortgage broker has all of your information up front and you have been pre-qualified. Your mortgage broker will still need additional things from you throughout the process, but it will be much easier if they have a fairly complete financial package from you upfront. In addition, most bank sellers will not accept a contract without a pre-qual letter, so again this is a key to having your offer accepted.
I have been asked if bank owned properties are more difficult to get financing on. To date, the answer is no, the fact that the property is owned by a bank has not yet become an issue during the loan process.
Some of the distressed properties need significant repairs. How this affects the loan can vary widely depending on the loan product and the extent of the necessary repairs. The best thing to do is to inform your mortgage broker about any repairs the property may need and keep your mortgage lender updated on any new issues that arise. Communication is key.
Short sales can be a very long process. The homeowner may accept the contract but the homeowner’s lender has the final say as to whether the contract is accepted or not. The lender review and approval may take months to complete. I highly recommend that your mortgage loan is started once the current homeowner signs the contract and while the bank is reviewing the offer. Once the short sale lender accepts, the time lines will be tight and it will save you a lot of stress if you are prepared in advance of the short sale approval.
Buying a distressed property can be very exciting but it has modified the lending process a bit. We have closed many purchases on distressed properties and know that the process can be smooth with the right knowledge and preparation.
Kathryn Pedersen – Loan Officer
PrimeSource Mortage 970-761-2245
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