If you’re hoping to find a faster, less costly path to home ownership by purchasing a home that is in foreclosure or is a short sale, be wary. Buying a “distressed” property can be complicated, so here’s what you need to know about foreclosures and short sales.
In a short sale, you are buying a home from a homeowner, who has received permission from their own lender to sell the home for less than the balance on their note. However, the lender will be the party calling the shots. They’ll have to approve the sale, meaning you have to deal with both your lender and the seller’s.
Short sale homes are typically still occupied, or only recently vacated., meaning the house is likely to be in fair to decent condition in regard to landscaping and the utilities may still be on, meaning you can do a proper walk-through.
A disadvantage of short sales is that they can take a long time to close. This can cause issues with your own lender. Getting preapproved before looking at short sale options is a must. If there is a second lien holder on the home, even more complications may crop up, so due diligence is also a priority.
In a foreclosure, the bank has seized the home and is selling it to get it off their hands. Banks aren’t in the real estate business, and they just want to recover as much as they can on the defaulted loan. This can mean you’ll find real deals in foreclosure listings.
Since foreclosures have typically been vacated, there may be signs of disuse, pests, or even evidence of break ins or vandalism. Make sure you figure out what kind of work you’ll be doing on a foreclosed home, and realize they are more likely to be a fixer-upper.
You can get a loan to buy a foreclosed property, and even special loan programs may apply (the FHA/Fannie Mae have options for foreclosed property purchases.) Be aware that if you want to buy at auction, you will probably not be able to get financing or you’ll have to turn to hard money loans which require high down payments with significant fees and high rates.
You can find some great deals either as short sales or as well-maintained foreclosed homes, but you’ll need two things before you begin your home search: an excellent real estate agent with experience in distressed properties, and a preapproval for the right kind of loan.
Your Sammamish Mortgage Loan Officer Can Help You Start the Preapproval Process Today!
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.