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FORECLOSURES & SHORT SALES |
FHA PROGRAM, HOPE FOR HOMEOWNERS The U.S. Department of Housing and Urban Development has unveiled the Hope for Homeowners Program for borrowers facing difficulty paying their mortgages. Effective thru September 30, 2011, the program allows homeowners of single family, owner-occupied units to refinance into an affordable FHA-insured, 30-year fixed rate mortgage. Check with your lender for latest updates and availability. Lenders must agree to write down the loan to 90 percent of the appraised value. Eligible mortgages are those which originated on or before January 1, 2008, and borrowers must have a debt-to-income ratio higher than 31 percent. Participating homeowners must agree to share the future equity of the home with FHA when the home is sold or refinanced. After five years, the equity split is 50 percent. FORECLOSURE
ACTIONS When a homeowner receives a
notice of foreclosure it means the homeowner has failed
to comply with the terms of the mortgage and the lender
has decided to begin the legal process of repossessing
the property. Even after receiving a notice, it's not
too late. Most mortgage companies prefer that a
homeowner continue to pay their mortgage and are willing
to work with a borrower to find a solution that will
allow a homeowner to stay in his or her home. It is
important to call your lender and discuss your options.
Be prepared with financial information, such as your
monthly income, monthly expenses and debt. For example,
if your monthly income suddenly drops--because of job
loss or illness--the lender may be able to make a
temporary adjustment to your mortgage until your monthly
income increases again. If you believe you may have
trouble paying your mortgage, contact a HUD-certified
mortgage counseling service such as the Homeownership
Preservation Foundation's Homeowner's HOPE hotline at
888-995-4673 for free counseling 24 hours a day. If
there is no way to avoid foreclosure, you will need to
be prepared to move by the foreclosure date. One more
item of concern, make sure your REAL ESTATE PROPERTY
TAXES are paid on time so you avoid the tax sale
process at the end of October each year. Buying
Foreclosures What will you give up to "get a good deal"? Almost everyone expects at least some discount on the purchase price of a foreclosed property. But buying at less than fair market value has numerous risks and pit-falls. Foreclosures can be divided into two general categories: Pre-foreclosure properties and those that have already been foreclosed and are currently owned by the lender (REO's). Pre-foreclosure properties include short sales. A short sale is when the list price or the purchase price will be less than the current mortgage owed. These require bank approval and can take a considerable of time and negotiation. Properties purchased as a sheriff's or judicial sale are very risky and are not recommended for anyone but the most experienced real estate investor. Prior to the purchase of properties at a foreclosure sale, a thorough and complete lien search must be ordered from a local title company to protect the purchaser against lien claimants that were not named in the foreclosure suit itself. Often buyers are not able to view the condition of the property prior to sale. In this circumstance, it must be assumed that the property needs substantial repair and/or remodeling. Also the buyer at a judicial sale must be keenly aware of whether or not the real estate taxes have been paid because delinquent taxes follow the property and will be the responsibility of the buyer if they have not been paid. Sales of listed foreclosed properties may not be in livable condition. Many foreclosed properties have been winterized with water meters disconnected, pipes cut, and gas and electricity to the home shut off or discontinued. Because there is no way to test the furnace, electrical system, or plumbing prior to sale, it is highly recommended that a purchaser of a foreclosed property have a licensed home inspector check the home prior to the submission of any offer on the property. Quite often there will be water damage, broken or removed appliances and fixtures, and even furnaces and air conditioners removed. Also, many times there will be addendums to the contract which pass many of the seller's typical closing costs on to the purchaser. It is highly recommended that purchasers contact their attorneys to review the addendum and contract for a detailed explanation of their rights and obligations. Many buyers see foreclosures as an opportunity to "get a good deal" or make money by fixing them up and/or reselling them. There are many good deals out there, but buyers must be aware that often times the maintenance on the home has been neglected and serious problems can be present. You will also want to allow extra time for foreclosures and short sales to be accepted and the transactions completed. IF YOU ARE A SELLER OR A BUYER INVOLVED IN A SHORT SALE OR FORECLOSURE EMAIL OR CALL ME AT 815-381-6850 AND I WILL HELP GET YOU STARTED IN THE RIGHT DIRECTION.
As your Personal Real Estate Advisor an important part of my job is advising and guiding you through the home buying or home selling process. That includes financing and the difficulties of short sales and foreclosures. Above is some basic information about foreclosures and short sales which I hope will be helpful in the process of avoiding foreclosure, but there is no substitute for a direct relationship with your mortgage lender. A mortgage is a complicated transaction, but there is no reason for it be be difficult. Please don't hesitate to ask me and your lender for help if there is something you don't understand. Or apply online here. For a list of mortgage lenders in the Rockford area and this weeks interest rate information -- see my weekly local mortgage rates update. If I can be of help to you in buying or selling a home please don't hesitate to call at 815-381-6850 or email.
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Bill Marek, Real Estate Advisor and Personal Realtor®, Rockford, IL
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