Sorry I am bombarding this forum with newbie questions.
I think my short sale offer is about to die a sad death because I just found out the customer service rep at Amerisave was wrong when she told me originally they could finance a short sale. The manager says they can’t. So I have no mortgage financing.
Before I just forget about the whole thing, can anyone point me to reputable national (or MD) lenders with competitive rates that will finance a short sale? (Btw, I’m not an investor - this would be for a family home).
As another option, this is a situation of two mortgages - 80/20. My offer would cover the first mortgage but only about 10% of the second, I think. I’m guessing that the 1st mortgage is not assumable, but say it were, could I still pursue a short sale with the second? (If it was only 10% I could come up with the cash)
Urgent advice really appreciated! (I’m tired of agonizing over this…)
Any traditional lender should do this deal. The fact that it is a short-sale on the seller’s side should have ZERO to do with your financing. You are essentially asking a lender to give you money to buy an owner-occupied property for about 10% less than appraisal. It should be a straight-forward deal so just keep calling around.
As for your assumable first/short the second question… yes, it can be done. Just negotiate with the second. Tthis might be a better way to go because if this went to foreclosure, the second lien-holder would most likely get squat. In a short sale situation, it is not unusual to make the second go away with $1000 offer.
turborocket is right - any traditional lender should be able to do the loan. You qualify for it just like you would for any other owner occupied mortgage. The short sale has nothing to do with your ability to qualify.
You could definitely negotiate with the second mortgage holder to try and make it them away and then see if the first mortgage holder would allow you to assume their loan with qualifying.
Thanks for the feedback. In fact, Amerisave came back to me - they say they can do it as long as it’s not a “fixer-upper”. I’m a bit concerned as the place needs a full repaint and all carpets replaced before you can move in (that’s all, though). They say the underwriter might not accept it (considered deferred maintenance) for that reason EVEN IF it meets appraisal.
Paint and carpet are not usually a huge deal to a lender but the appraisal certainly is. Are you buying this home because it is the only one on the market you really want to live in for the price? Have you done your homework on the comps? Is it worth the hassle of a short sale if you are only getting it for market value or are there others on the market that would do just as well?
Depending on how much the appraiser estimates the cost to “cure” the deficiency, the lender may allow for a repair escrow. Some stricter/conservative lenders won’t allow for repair escrows except if it is weather related. Just check around. It also depends on the type of loan you need. For instance, I believe a standard FHA loan will allow up to $35,000 rehab costs - this changed just beginning of '06. This allows you to avoid the more cumbersome 203k loan. Of course, you could also get a conventional rehab loan possibly.
A final note… does the house NEED paint and carpet because it otherwise won’t appraise, or you WANT new paint and carpet? Something to consider…
Thanks, VA and TR. I asked Amerisave what the problem would be if the property met appraisal despite the cosmetic work that needs doing (I’m very confident it would), and this is what they said:
“the problem is that the appraiser will take pictures inside and out. These pics would be submitted to the underwriter and they would probably not approve it especially if comparable properties are not in the same condition and look better. It’s considered deferred maintenance which is not looked upon favorably by our underwriters.” But they say we can try it.
I still don’t get it. “Comparable properties” in better condition would get a higher offer. And if you bought a house from someone that had kept it in good condition but you hated the decor you’d still want to do the same amount of work. Maybe they didn’t understand that I wouldn’t be asking them to lend on the repair work (only on the offer price)? I will have to check.
Turborocket, the house needs paint and carpet before anyone can move in - it looks like two 6 year olds and a dog were held prisoner there on their own for a month. (Who knows maybe they were…) But it doesn’t need paint and carpet to meet appraisal on the value of the mortgage we would need - it would be worth substantially more is my bet. When you say an FHA loan would allow up to $35k rehab, do you mean the loan could still be made on a property that needs that, or do you mean the $35k could be added to the mortgage in order to finance the rehab (ie. mortgage= X% x offerprice + rehab costs)?
VA - yeah, we really like this house, but of course our offer does include a discount for the hassle of the foreclosure situation, and we did look hard at comps before deciding on a price (tho you never really know what’s a good comp because tax records don’t tell you what kind of condition a property is in). I think I’ll put in a post to get feedback on the exact values…
Thanks again to you both, and if you could advise me on my next post I would be eternally grateful!