I admire my clients. They find the perfect home – or so they think, and then are driven to close the deal regardless of financing roadblocks that surface. Sometimes, though, they don’t see the forest for the trees.
Typically, there are relatively simple solutions to resolve issues. For example, if a lender requires a borrower to evidence timely rental payments via cancelled checks (but in some months cash was paid), the landlord can confirm this with a signed Verification of Rent (VOR) form.
But when several solutions are required, stretching is likely not the best answer. I’m all for rolling up the sleeves and making it work, but there is a point when you need to walk away so that either your economics are more comfortable or you truly know your Seller’s bottom line.
Having some of these example issues should give you pause:
Debt-To-Income Ratio Too High
>Restructure Vehicle Loan to Reduce Overall Monthly Payments
Low Appraised Value & Seller Is Price Inflexible
>Obtain Gift Funds to Cover New Equity Required
Higher Gift Funds Introduces Risk to Lender
>Evidence More Cash Reserves in Bank Account
Uneconomical Homeowners Insurance Costs
>Change from Replacement Cost Coverage to Actual Cash Value
There is Asbestos in the Siding & Ceiling Tiles
>Accept the Fact that Fibers Are Not Airborne Unless Disturbed
Dry Rot and a Ceiling Leak
>Seller to Set Aside Sufficient Repair Reserves
Remember: Your best solution may very well be to find another property!
Here’s the Point: Don’t fall in love with your real estate purchase until you are Cleared-To-Close, because your judgment might be clouded.
Homeowners who entered into short sales after the U.S. Housing Crisis are back purchasing homes again.
Between 2010 to 2014, a significant number of foreclosures took place. Lenders exercised steps to take title to many homes – typically because borrowers were unwilling or unable to correct their late payments or defaults. Now, 7 years after receiving a Certificate of Title evidencing the property foreclosure sale, many borrowers can qualify for conventional financing (only 3 years to qualify for FHA financing).
Instead of allowing a foreclosure, however, many people took the time to sell their homes for less than the amount of the outstanding debt – at the approval of their lenders. As indicated in the following chart, these “short sale” arrangements require less of a waiting period to obtain a conventional mortgage than the waiting period for a foreclosure.
Years of Seasoning for Mortgage Qualification:
Provided 4 years have elapsed since the HUD-1 Closing Statement was finalized from a short sale, mortgage financing can generally be made available again (only 3 years for FHA, and 2 for Veterans Administration loans). These waiting periods are the same if, instead of a short sale, title to the property was voluntarily transferred to the lender in exchange for a release from the mortgage obligation – i.e., a Deed-In-Lieu of Foreclosure (DIL).
According to the Federal Housing Finance Agency (FHFA), short sales and DIL’s are down at least 65% since 2014 – and therefore a large segment of home purchasers are buying homes again, which is contributing to increased home values.
Here’s the Point: Many people are now able to qualify for mortgage financing, now that their short sale or foreclosure seasoning periods are over since the U.S. Housing Crisis.
Art Espinoza recently asked me to return to his radio show entitled “The Art of Investing”. Art is a respected financial advisor and wealth manager with offices in Vero Beach, Florida and Brookfield, Wisconsin, and his show airs every Saturday at 9:30 am on WAXE 107.9FM and 1370AM, or on iHeart Radio.
I recently had the pleasure of appearing on a radio show entitled “The Art of Investing”, hosted by Art Espinoza. Having known Art for quite some time in the Vero Beach community along the Treasure Coast of Florida, he asked me to discuss what’s happening in the real estate market, who the primary borrowers of real estate capital are, where I see interest rates going, and a variety of other related topics.
Art has been a respected financial advisor and wealth manager for 28 years, and has offices in Vero Beach, Florida and Brookfield, Wisconsin. His show, “The Art of Investing”, is broadcast every Saturday morning at 9:30 am on WAXE 107.9FM and 1370AM, or on iHeart Radio: http://www.iheart.com/live/WAXE-1079-FM-1370-AM-4788/
Art kindly asked me to make regular appearances on his program, and I look forward to sharing real estate industry dialogue and exchanging topical ideas with listeners in the future.
Well, his name isn’t really Freeman, it’s actually FREMN.
Let me explain: FREMN is an acronym for “Florida Real Estate & Mortgage News”.
FREMN.org is a new, top-source, for news and information concerning real estate and mortgage issues in Florida. Since anyone can read, post, and/or share related articles at FREMN.org, it’s a great place to visit if you have an interest in the most up-to-date stories. The articles are mostly from Florida and U.S. publications, but also from around the world – focusing exclusively on Florida.
FREMN.org had over 6,000 “hits” on the first day it was created, and only weeks later it continues to consistently attract an impressive number of daily viewers. The idea was conceived by Robert D. Almquist, Senior Editor of FREMN.org. Robert, a retired lawyer who practiced real estate law in Canada and the U.S. for over 25 years, is Strategic Marketing and Legal Advisor for Ocean Mortgage Capital, a member of OMC’s Advisory Group, and is CEO of Zumarra International, a sophisticated digital agency and online marketing company. Thanks Robert!
Have a look at FREMN.org when you have a moment, or when the time comes to read about and stay current on real estate and finance topics in Florida. And by the way, for a one-stop comprehensive selection of the best websites for market research on commercial and residential real estate throughout Florida, the United States, Canada and globally, click on: http://www.oceanmortgage.com/marketresearch.html.
Thank you for visiting.