OUT IN THE COUNTRY...

 

 

Before the breathing air is  gone

Before the sun is just a bright spot in the night time

Out where the rivers like to run

I stand alone and take back somethin' worth remembering...

 

 

 

  The lyrics of that old Three Dog Night song describe it exactly-the yearning for a home out in the country. I hear it every day when I ask potential borrowers what they are looking for in a home-a very large percentage want to live in the country.  That's most people's dream-right? The patch of ground that is our own, where we can plant a garden, have a goat or two-where it is quiet and peaceful.

 

www.trails.com

 

 And if you live in a rural state such as Indiana, a home in the country is something that many people grew up in-so it is not so unlikely that as they reach the time to purchase their own home that is what they want. The folks that grew up in the country or small communities are not the ones I am writing this blog for (though you are welcome to hum along and agree when I get it right.)

 

 I am writing on this topic for the folks who grew up in the city or larger communities that don't know a rooster from a hen. It is you folks I am speaking to-so listen up.

 

 

                                                             georgehancks.com

 

  For the uninitiated-that is a rooster.  A hen looks more like this:

 

                                                               emmabridgewater.co.uk

 

 Oh no-that's not it-that is what my city friends may envision as a hen-let's try this:

 

                                             boldtgallery.com

 

That's more like it.  Anyway-all this talk about chickens brings me to a point: If you have never lived in the country you probably should do some research on what that means. Many times when people talk to me about a home in the country this is what I think of:

 

 

                                                        theartofilmblogspot.com

 

 For those who weren't raised on 1960's situation comedies or are students of such-the conversations I have with city people describing the idyllic country vision they have should take a gander at this show in reruns-Green Acres-wherein the city slickers move to the quaint town of Hooterville and mad-cap chaos ensues.

 

  In any event having lived in the country for thirteen years, I don't consider myself an expert, but I do know a couple of things about owning a country property.  Here are the negatives you can expect:

 

1) Mileage on your vehicle-any time you are out of bread or need to take a child to an after school event you will be behind the wheel. If you have multiple children at multiple schools the mileage will add up quickly.

 

2) Be prepared if you live in a northern climate to be snowed in. This may only be for a day or it could be a week or more depending on how remote your place is.

 

3) Consider medical emergencies and the additional time to get help if you need it.

 

4) Likewise fire protection. There are no hydrants out in the country. Our credo was always, "If it is on fire, it's gone. Get the kids and pets out."

 

5)  

 

                                                            1800srecycling.com

 

Bugs. You get bugs. No municipality sprays for insects in the country.  You get these little guys swarming in June, whacking you in the head as they fly by. In the spring and fall you will be visited by a plague of Asian Lady bugs trying to get into your house.. By the way those pretty little bugs bite and when you chase them with the vacuum they smell bad. A natural defense I am told. I am an expert at those, having spent hours with the vacuum only to have hundreds more crop up where I began. You also get mosquitos, ticks, spiders and other not so pretty insects that bite, eat your garden and other wise create havoc.  But you see, the country is where they live.

 

6)

 raccoonfactshub.com

 

 

 

Awwwww....raccoons....very cute. But not when pooping in the kiddie wading pool. They also carry rabies so outdoor pets may be at risk.  You will probably run into some snakes too. Not so cute.

 

 

7) Mowing-if you want to keep your property useable you will have to also invest in a large riding mower. Mowing a couple of acres can pretty much kill a Saturday. And get a blade on that puppy-so you can get out of the drive in the winter.

 

 

8) Vacation paradise.  My extended family thought that our house was the place to go for family reunions and vacations. Maybe yours won't. But if you have a picturesque property there is the chance that everyone you are related to will camp out at your place during their vacation if you let them. So unless you are prepared to become a bread and breakfast, you might want to consider how well you get along with the in-laws.

 

9) And speaking of those chickens...if the farm down the road has roosters everything you have ever heard about roosters greeting the new day is true. They make a lot of noise. Early. In. The. Morning. If you choose to live in the country you have to get used to roosters and perhaps being downwind of a pig farm. There really is no odor like that which our little porcine piggy friends exude, totally unique. Where are you going to keep farm animals if not on a farm? They had a claim to the country before you did. So there is that.

 

10) Trespassers.  People who come on your property without permission to hunt deer, birds or mushrooms.  There are those that just don't understand that your yard is not for picnickers.

 

  So have I talked you out of this yet? No? Okay-then let's take a look at the positives.

 

 

1) Quiet.  Or I should say, a different kind of noise.  I always used to tell my children that they should listen to the summer music-the chirping of crickets, and the whirring of cicadas-which can actually be quite loud in July and August.  But it is a beautiful sound. You might hear a barking dog, coyote, or owls making a din at night. But those are wonderful noises in my opinion.

 

2) The night sky.  At night you can actually see the sky, the constellations and the weather rolling in. I spent one August housebreaking a puppy during the Perseid Meteor Showers-the only time I have ever been happy to be awake and outside at three in the morning.  I also had a grandstand seat for the comet Kohoutek when it made it's close to earth run. Breathtaking!

 

3) Gardening-if you are a gardener and like to grow and put up vegetables living in the country is great. Be aware that the deer, cabbage moths, raccoons, and rabbits also really enjoy and appreciate what you are growing as well.

 

4) I am a wildlife lover.  So I always enjoyed watching the variety of wildlife I saw in my yard. The birds at the feeder in the country are spectacular. Watching hawks hunt is also amazing.

 

5) Not having to put up with neighbors.  That is a nice advantage. On the other hand if you need help quickly it is not so nice.  It took me a long time after I moved into town to adjust to looking out my kitchen window and seeing a house directly behind me.

 

6) Space for kids to roam.  Letting the kids out into the backyard to run off a bit of steam is a great feature of living in the country. What they bring home from these rambles sometimes isn't. ( The skeletal remains of a possum anyone?)

 

7)

ohio-nature.com

 

Bugs! Yes, the bugs are an advantage of being in the country as well as a disadvantage. We used to watch the milkweed pods for the cocoons of Monarch Butterflies and hatch the adults in canning jars. They were beautiful as they flew away for Mexico upon release.

 

Would I say there are more advantages to living in town than in the country? Not necessarily. Each situation is unique and has to be evaluated by every individual buyer. If you have an busy young family that is engaged in many activities, you might consider a more suburban setting.  What is important is that you know that life in the country is different and has its own advantages but then so does life in town. Just be sure you evaluate each based upon how you want live.

 

 

 

 

 

 





 



 

 

 



 





OPEN HOUSING IT

  In a past life I was a real estate agent. I would have loved one of the above type signs to advertise my open houses-that baby would really bring them in-don't you think?

  But no matter what method of marketing draws you to an open house, if you are interested in entering the real estate market as a buyer or seller, touring open houses can provide you with a lot of information.

  For the first time buyer, I would highly recommend becoming pre-approved first so that you don't wander through a home you can't possibly afford and then all others pale by comparison. However, that isn't the way it works in the real world. In the real world people begin to consider that they want to purchase a home and want to see what it out there. The exciting part of the process is viewing properties-not figuring out how you are going to buy one. That process is dry as dust.

                                                oklahomafarmreport.com

 Most people have an idea whether right or wrong, about what they can afford and will select properties based on that assumption. Going through open houses is a non threatening way of getting a feel for what is available in what price range without the pressure of committing to purchasing.

 Of course the down side of this is that someone may find a home that they believe is perfect and not be in a position financially to purchase it. While they are running around trying to become pre-approved someone else may buy the house out from under them, or because of the pressure to buy THAT house RIGHT now, may make a quick decision that is better thought through.

                                             thefiscaltimes.com

  Since the purchase of real estate is the most important financial investment that most people make it is important that one looks before taking the leap. The opportunity to go through open houses is just the type of preparation that may work to begin the preparation to buy.  In fact most home buyers begin looking at open houses a full nine months prior to purchasing a home.

  All types of folks come through open houses. Some are pre-approved buyers who are seriously looking, some are folks from the neighborhood who just wish to snoop  a little because they always wanted to see the house or get an idea of what their own home is worth. It is also a chance to learn more about the particular house and the real estate market in general because the real estate agent that is hosting the open house is there for a reason-to give open house attendees information that might interest a potential buyer.

 There is no reason to fear the agent hosting the open house. They may ask you to sign in as a service to the seller-most people like to know who has been in their home. They may ask you what you think of various aspects of the home and the price. This is a way of obtaining first hand information for the seller.  And most agents are alert to the possibility that there are folks coming through who are getting ready to buy who haven't selected an agent yet-that is true. But here's the thing...good agents are very busy people. They have multiple clients-both buyers and sellers that currently need their services. A busy agent doesn't have the time to chase a potential buyer down to get their business. So that is something you don't have to worry about. The truth of the matter is-no one can sell you anything you don't want to buy. You are either ready to buy a home or you aren't. And if this isn't the home for you, you aren't going to buy it.  What you can do if you are in the preliminary stages of looking for a home, is get a feel for agents that are working the open houses.  See how they treat people and dispense information. If you like the style of the agent you may want to engage them when you are ready to begin your serious search for a home.

  If you are going through an open house you will get a feel for the neighborhood and, if there are neighbors going through the house you will have an opportunity to ask about the neighborhood, schools etc. I often attend open houses myself with my realtor partners.  This enables me to get a feel for the market, how busy it is as well as speak with people about various financing options for the specific home or figure payments for potential buyers.

  Open houses do move properties. It is a terrific tool to bring buyers to a property that might overlook it for any number of reasons. It is a no risk opportunity to test the waters, find an agent if you need one, and preview a neighborhood and its amenities. It is all part of the preparation process to buy a home. Take advantage-it is free after all!

HOW DO I CHOOSE A LENDER?

                                                             careercast.com

  How does one go about choosing  lender? How do I know who will give me the best rate? Is there someone out there that won't charge closing costs? What if I have to bring a LOT more money to the closing table than the lender told me I would need? Will they cheat me? Can the lender promise that my loan will close on time? Are they asking me for too much documentation? What if there is a pre-payment penalty and I didn't catch it in the paperwork. Should I read all the documents prior to loan application? I don't understand what they mean.

 All these are good questions-but they really just skim the surface of what you need to know when choosing a lender. First and foremost don't worry about your lender cheating you or having to bring more money to the closing table than was disclosed to you at application. Federal law has just about made those worries obsolete. Whatever the lender has disclosed to you at application with regard to your fees is what they are going to be unless there is a significant change in some facet of your loan. There are circumstances that can generate a change in fees such as a re-inspection on your appraisal-but what you see on your estimate should be within a few hundred dollars of what they will be when you close.  Title companies and lenders are now held to a very high standard with regard to fees.

  Isn't it best to go with the company that has the lowest interest rate? I often talk to folks who think that it is all about the interest rate.  Low rates are great-but I often tell clients that if they have found a rate that is significantly lower than every one else in town-something is off. It is not unusual for lenders to quote low to get the client into the bank/mortgage loan company. And it is true that rates change daily so if a lender quotes you a rate and it takes you three days to go in to talk about your loan, the rate may have changed-and not necessarily for the better.  Choosing a lender because they quote you a lower rate is somewhat like throwing a dart at a moving target. Perhaps you will get lucky-the again...

                                              bleedbigblue.com

  Rather than make the interest rate your criteria for choosing a lender, let's try a different approach.

  Many people think the logical place to start is their own bank or credit union.  And that may work well for many folks-but keep in mind that the bank or credit union has one source of money so you may not be getting a look at the best options out there. And from personal experience at my own credit union-let's say I have been very unimpressed with how they go about consumer lending-who gets the thumbs up, or is declined and the reasons behind the decision.

 Another option and in my opinion a better option would be to take a look at a mortgage broker such as Tippecanoe Mortgage. We offer money from several different sources and we don't expect you to move your depository accounts in order to obtain the mortgage. We have the ability to approve a broader range of borrowers due to the multiple nature of our investors. Of course I would say that since I work for a mortgage broker but it is true that we offer a choice.

 Let's look at some other things you may want to consider in your search for a lender-such as:

ownlessandlivemore.com

 



 

The experience of both the loan originator and the company they work for is critical.  Lending has changed dramatically in the past six years. It is important to choose someone who has worked continuously through the changes.

 

Communication is another exceedingly important factor in today's world of mortgage lending.

 

 

                                                huffingtonpost.com

 

That should go without saying (but is going without saying communication?) What a borrower needs is a lender who will answer their questions, explain unfamiliar procedures, documents and terms, and keep the borrower in touch with every step in the process.  Communication begins prior to commitment to the lender. If a loan originator can't call you back when he/she is trying to make the sale, how well will they communicate throughout the process? That is a good question to ask yourself.  And by the way, communication isn't just about -

                                                         dreamstime.com

 



Communication is also about bad news.  Low appraisals, unexpected inspection results, factors that affect the interest rate to the worse, denials-there is plenty of bad news to go around in the mortgage business that must be communicated with solutions.

  The ability to find a solution to problems is another hallmark of a good company that employs knowledgeable experience originators. Many people have issues or situations that put them "out of the box" with regard to mortgage lending. Maybe it was a job lay off or a foreclosure.  Perhaps it was relocation, or working for a temp agency, or a fire that destroyed the previous residence.  All of these are problems that have come across my desk to be solved in the past 12 months.

  But how do you know how an originator communicates? Or whether or not they are good problem solvers?  Ask around.  Often the best referrals come from friends and family.  At Tippecanoe Mortgage a very large percentage of our business comes from past clients.  If we have done a good job for someone they are only too happy to talk about it.

  Check various lender's websites.  If all they offer is basic information in a generic format, you may want to shop further. Our new website www.tippecanoemortgage.com  is stuffed full of information that is useful to the consumer-including a link to this blog as well as an online application.

  There is so much more to choosing a lender than selecting the lowest interest rate. Consider all aspects of the process you are about to enter into prior to going with the lowest rate-there is a lot more to the equation than the bottom line.

WHAT HAPPENS AFTER I SIGN ON THE DOTTED LINE?

                                                         www.pull the curtain.com

  Pay no attention to the man behind the curtain....but really, that is how loans get done-all the work  goes on behind the curtain.  What the borrower knows is one day they come in and sign a bunch of papers and then wait, occasionally being summoned to run around and gather things for underwriting and then they close.  So I thought that for today's blog I would take a moment and talk about what happens when I slap a file shut that has your name on it containing all the documents that you just signed.

  Typically once a loan application has been signed there are a few things that the originators at Tippecanoe Mortgage have to do to prepare the loan for submission. One of the tasks is obtaining an electronic approval known as DU or direct underwriting.  The file is uploaded to the Fannie Mae website and submitted for electronic approval. This is a first check on whether or not the loan has all the qualifications required for Fannie Mae to purchase the loan. Typically, if what we have entered onto the application is correct we do receive an approval. (If we felt we wouldn't you probably wouldn't have gone through the exercise of signing a loan application.)

  Once we have those results we turn the file into the person called the loan processor who works with the file on a daily basis as it goes through underwriting. The processor is a very important part of our whole operation. While I may be the face of Tippecanoe Mortgage that you see or hear from on a regular basis, for all intents and purposes the loan is off my desk.  My role is to communicate what the lender needs from you in order to approve the loan, information that is relayed to me from the lender by the processor. Our processor is a critical link in the smooth management of the loan.  Once in awhile I am called upon to use problem solving skills to obtain information or solve some type of issue with the loan package, appraisal or title work that has to be resolved prior to closing. For the most part at this point my role is communication.

                                               stephaniepais.com
 As I mentioned the processor's job is to prepare the loan file for submission to the lender which is done electronically. Then she communicates with underwriting to be sure that all the items needed to make an underwriting decision are available to the lender.

  During this process the fees that are charged are evaluated using a government compliance model by the lender to be sure all government regulations are met. At the same time the title work is ordered so that there is a title history available on the property and title insurance issued to protect the buyer against any claims that might turn up that were not found. In other words if Uncle Frank wandered off to Alaska fifty years ago and turns up claiming that he owns the house...the buyer is insured so that their interest is protected.

                                                ochistoricalblogspot.com

   At this time we also track down home owner's insurance for the property, obtain verifications from the borrower's employer, verify bank statements and rental payments. Once in awhile we have to update credit payments on the credit report. The appraisal is ordered at this time to ensure that the home is worth the purchase price.  Just a bit of added information on appraisals-we are not allowed to talk to the appraiser. Our role in the process is to place the order.  We are not informed of when the appraisal will occur, nor are we allowed to discuss the appraiser's report with the appraiser when it is returned.  All we can do is check with the listing agent to be sure that the appointment has been made. From that point we have an idea of when it will be returned and can check to see the ETA of the report but until it is made available to us we are as in the dark as anyone else.

  The most time consuming portion of the process has to do with gathering all the conditions set out by the underwriter to approve the loan. Both the processor and I work on these items-me contacting the customer, the processor all non customer related items.

  At some point I will lock the interest rate. Typically we have until about five days prior to closing to set the rate for the term of your loan. Some folks prefer certainty and ask me to lock them in at the time of loan submission. Others have a bit more of a gambler's nature and are willing to play the market so to speak, in hopes that they will get a bit better deal. If my client is one of those folks I always keep a close eye on what is going on because the rate the buyer wants may only be available for a few short hours.

mathwire.com

 Once the underwriter has received everything needed that satisfies the requirements of the loan they will issue what is known as a "clear to close." This means the loan passes all the smell tests for the rules of the loan and the rules the eventual investor has set for the loan to be sold. Then the loan will be lined up to go to quality control for a next to final check to be sure everything required is in the loan file. Quality control is concerned with any documents that might not be complete or verifications that may have been left out of the file.

 While quality control is going on, back at the ranch, the processor at Tippecanoe Mortgage is ordering the documents needed for the lender to create the loan package a well as sending any invoices that need to be paid at the time of closing. Some of these invoices might be home owner's insurance, any inspections left unpaid etc.  In some cases we are required to pay off credit cards or collections in order to close so invoices for those items would be included. The lender will do a final check to ensure that the borrower is still employed. Once all this has been done the lender will allow the closing instructions to be sent to the title company and the final closing details are finished up. Once in awhile someone other than the seller will be signing for an out of town or unavailable seller so the title company is required to handle the legal documents that allow a third party to sign for the seller. Once in a great while the buyer cannot be present, but if that is the case, the buyer's power of attorney has to be cleared by underwriting before the clear to close is issued. 

 Prior to the clear to close the title company has done a last minute update to be sure no liens or judgments have been filed on the property in the time between the initial title search and the closing date. Property taxes have been verified and sent to the lender so that escrows can be calculated and tax pro-ration amounts are correct. The final step for the title company is to create the settlement statement in accordance with Federal regulations and have that statement approved by the lender. Once all that has been done, and only then may closing proceed.

  Whew! It' s finally over, one would think!

                                                  allthingsd.com
   But you would be wrong.  There is a post closing audit that happens as well. Normally the borrower will be totally unaware of this process, but every once in awhile something pops up that is incorrect or missing.  At closing the borrower is asked to sign a form that he/she would assist in correcting or completing anything needed for the file.  Blowing a request for a new signature or document is not a good idea. The lender has remedies, including calling in the loan-so pay attention the ten days after closing to any and all communication from the lender.

  Chances are you probably never wanted to know all this...

 I know-it's detailed and it's really not very interesting...but this is the life story of your mortgage loan.

I HAVE TO BE OUT OF MY APARTMENT IN THIRTY DAYS...

                                                   movinginsider.com


 One of the most pressure filled situations to put yourself in is to decide to buy a home thirty days before the apartment lease is up.  Unfortunately many new homebuyers find themselves in this situation when they haven't taken the time to become educated about the process of home buying and how long it can take to find a suitable home  as well as make  mortgage application and the time line to closing.

                                                   m-b-west.blogspot.com

  Well, yes, it is something like that.

  If the buyer is not a picky shopper, theoretically the process can be completed in thirty days.  However, that requires a fast purchase, a fast lender, and absolutely no snags or issues that arise during the process.  If you are a regular follower of this blog you know that a loan process without issues almost NEVER happens. And a plan can reduce those issues by addressing them upfront. At Tippecanoe Mortgage we are all about P.L.A.N.N.I.N.G.  I can't say it any better than that. Purchasing a home is not an impulse buy (in most cases.)  In fact since it is probably the single most  significant financial purchase you will make in your life, you probably owe it to yourself to do a bit o preparation before you run out of time on your current situation.
 
 Where to begin....let's see...

Before you begin looking at homes-yes even before you decide to wander through an

                                           news.deltanews.com

 You need to be sure you are in a position to buy that open house should you decide you can't live without it...in other words you are allowed to be impulsive, you just can't be impulsive before you have been practical and prepared.

  I have written a past blog on this but there is nothing better than being ready, willing, and ABLE to buy the house of your dreams. And if you haven't looked into the ABLE part, someone else may snap it up before you can speak with a lender, much less become pre-approved or...

walk into that open house with a pre-purchase underwritten approval offered by our company, Tippecanoe Mortgage to any qualified buyer in Indiana. Once you have the pre-purchase underwritten approval you ARE 30 days from moving out of your current digs because any questions about you as a qualified buyer have been answered.

  And for those of you who currently own homes and are ready to trade up-the aforementioned plan works for you too!  Many folks who haven't purchased a home in a few years assume that buying another home will happen- no problem.  This isn't necessarily the case.  Lending is a whole new world and the loans that sailed through so easily the last time will move much more slowly. Not necessarily because of you, just because the process is now built for Federal compliance not for speed.

  And of course you, Mr.and Mrs. Current Home Owner also have to deal with selling your property, closing your property and working through any issues on that transaction.  Just as a word to the wise, owning two properties isn't nearly as easy as it was a few short years ago. Deciding that you will rent your current home rather than sell it can be done, however, you need to be able to afford both payments as rent can't be applied to offset a mortgage payment unless the home has been rented and declared on two previous years tax returns as a rental-so they kind of cut us off at the pass on that one.

                                                  myloveofoldhollywood.com

   Most of our lenders can close a loan in 30-40 days depending on workload, but please keep in mind that is from loan application-not from when you began a housing search. Consider what you are looking for, talk to a lender like us to confirm your price range, do some searches with a Realtor to see what is actually available in your range and then set your time line. For most people who don't have a house to sell first, 60 days should be ample time. Hope you come by soon for a pre-purchase underwritten approval and you can keep it simple and fast!

BUYING A FORECLOSED PROPERTY

                                          fox6news.com

  As an industry professional, I enjoy watching HGTV shows-such as Flip or Flop, Property Brothers and Rehab Addict. (I have entered the HGTV contest to win the smart house in Nashville multiple times...well, daily...ok...in the interests of full disclosure as many times a day as they will allow.) In all those programs, the buyer or star of the show purchases run down homes, gives them a fabulous makeover and ends up with a beautiful home worth two times as much as they paid for it.  I often wonder if television programs like these influence buyers to dream about their own version of these shows-buying cheap and harvesting the equity from a repaired and restored home.

  And it is a fact that bank owned properties or HUD owned properties often sell well below market value-largely due to their condition. If you are considering purchasing a bank owned property let me list some facts in order to take the fantasy out of the equation.

1) The foreclosure process takes time-6 months to a year. Typically the original home owner will have vacated the home long before the sheriff's sale returns the home to the bank.  In the meantime the home has been sitting empty-or perhaps has even been occupied by squatters. In many cases the copper from the plumbing has been stripped, air conditioning units stolen, and perhaps the property has even been vandalized.

2) Banks aren't in the housing maintenance business. Depending on the condition of the property when the bank takes possession, the bank may or may not make some repairs. This is why you often see the properties sold "As Is".

3) Being vacant is hard on a house-seals on the plumbing dry out, if the property hasn't been properly winterized pipes may burst, leaks grow mold.

4) The bank that owns the property really isn't interested in making repairs in order to sell it-


www.kiji9ji.ca


Which means the repairs will fall on you.  So the first question is-

1) How will you get the money to make repairs? Do you have cash reserves?

  While there are a couple of rehab loans available-often the rules and controls on those loans don't appeal to buyers-not much sweat equity is allowed-nor can your Uncle I Fix It on Weekends do the work. Those loans can solve the problem -but the property has to fit within certain parameters and often it doesn't.

2) Most bank loans won't allow you to close on a property if certain condition issues aren't present. For instance, I can't tell you then number of borrowers I have met with that are frustrated because the home they want to buy is built on a slab and somewhere along the way, someone removed all the carpeting. Crazy as it sounds, lenders will not loan on a property that has bare concrete or subfloor showing.  Well fine you say, I will run out to the Home Depot and have them install carpeting.  Then we can close.  Except, the bank that owns the house won't allow the work to be done to make the house acceptable to the bank that is loaning the money (might even be the same bank).  In bank owned properties borrowers aren't allowed to make repairs prior to closing even if they are willing to pay for it themselves. 

  How the heck are you supposed to buy that house?  Unless you are using one of the FHA rehab products or a Fannie Mae rehab product, the only answer is cash.

                                        gcbusiness.org

Got any of that lying around?  Unless you are an investor or make your business flipping homes, chances are, you don't.

  HUD does give preference to owner occupants when the foreclosed homes they have taken into inventory go up for sale. HUD uses a bidding process and owner occupants get first crack in the bidding process.  In most cases HUD will have assessed the property prior to putting them on the market for condition and also had them appraised. In some cases the buyer can even use the HUD appraisal rather than ordering a new one for their own loan.  If the home is assessed as up to FHA condition standards, generally speaking there should be no problem obtaining financing (though in order to use the appraisal generated by HUD the loan must be an FHA loan.)   If on the other hand, repairs need to be made, and  there is mold, lead based paint present in the home, or termite damage-then one of the three FHA rehab loans will be required to repair and buy the property if the buyer can't pay cash.  HUD also will not allow a buyer to repair a home prior to closing.

  For small repairs, up to $5000, Hud sometimes allows a repair escrow that can be added into the borrower's normal FHA mortgage.

  On specific properties HUD also allows a down payment of $100.

  In any case, there is a huge amount of bureaucracy in the purchase of a bank owned property.  HUD has specific methods and procedures in the purchase of the homes in their inventory.  Many banks rely on a stable of attorneys to negotiate and make decisions as to the disposition of their homes.  Let me tell you something-attorneys can take a long time to get back to you-hope you aren't in a hurry to close.  HUD is a bit more timely but they have a specific process and they don't deviate or make exceptions.

  I don't want to discourage anyone from considering the purchase of a foreclosure. What I would say be sure you know what you are buying. Have the home thoroughly inspected (which can also be a problem as most likely the foreclosure you are looking at will not have the utilities on and in order to do a thorough inspection utilities need to be on-one more item that most likely will be on the buyer's dime.)

  In Indiana there are also tax implications.There are big discounts on taxable value based upon living in a home-a foreclosed property will have as much as triple the tax liability as a home that is currently owner occupied. What this means is that the first year you own your previously foreclosed property you will be  paying taxes that were assessed while the home was non owner occupied-or bank owned. It will be the second year you own the home that your discounts or exemptions kick in and lower the taxes on the property. So while you may get a great buy overall-you will pay more for while. Long term you probably will do just fine.

  Be patient -if you have to be out of your current living situation in a month or even three months a foreclosed property may not be for you. There is no guarantee that the sale will conclude on schedule-there are too many layers of bureaucracy and too many hoops to jump through. So be sure you have a Plan B for housing if the transaction goes on too long.  And plan to spend a long time waiting for answers.

                                                       icanhaz.cheezburger.com

                                  

THAT LUNCH AINT FREE

                                                          www.stripersonline.com


I am sure you have heard the adage, "There's no such thing as a free lunch."  In lending this is particularly true-even with 100% financing programs such as VA and USDA.  However it is not unusual for a borrower who is using one of these programs to expect that there will be no expense to him or her.

  Nothing could be farther from the truth.  It is true that with these loans there are no down payment expenses-but there are costs incurred before the loan closes. Typically these can range from $800-$1200.

  The first item that the borrower will encounter is what is known as earnest money.  This isn't money for the lender, rather this is a deposit that is given at the time the borrower writes the purchase agreement with his Realtor to put the property under contract.  Typically the earnest money ranges from $500 to $1000 though I have seen it as low as $100 or as high as several thousand dollars.  This money is put into the listing broker's trust account to be held until the loan closes. At that time it is applied to the closing costs or down payment of the loan if there is one.  The money itself is a token-a gesture if you will, to the seller to let him know that the buyer is "in earnest" or serious about their offer.
  It is true that this money may be at risk if the buyer decides for no good reason to default on the contract. Within the body of the contract are many different reasons why the contract may be declared void, but if a buyer changes their mind for no discernible reason the seller may be able to keep the money. This decision is made by a judge in a small claims court (in the state of Indiana anyway) so the Realtors involved and the real estate companies are not a part of the decision as to whether or not to release the money to either party.

  The second expense that the borrower will incur is for any inspections that they wish to have performed on the home.

 

 

www.aaronshomeinspections.com   


  The cost of a whole house inspection will run anywhere from $250-$500 or more depending on what all is inspected. Today's inspectors have been schooled in detecting many of the common problems that come attached to real property including well, septic and termite inspections, radon gas, and a variety of other whole house issues.  While a buyer doesn't need to feel they have to act on everything the inspector cites, often safety hazards and potentially expensive repair items are found in the inspection.  It is well worth the money.
 
 It is not uncommon for a borrower to ask me if they need to go to the expense of an inspection.  Not if you don't mind if you end up like this:

                                             stepbystepinspections.net

Even a brand new house is worthy of an inspection-I have know of one or two that have burned down due to an electrical wiring error.  More than one set of eyes never hurts.

 
The third major expenditure you will have does have to do with the lender. That is for the appraisal.
Many buyers assume that the appraisal is a closing cost and can be paid at closing.  It is a closing cost-but ever since 2010 when appraisers were required to work from third party companies known as Appraisal Management Companies, it is pretty much a rule of thumb that appraisal money must be collected up front. As a lender we do not deal with individual appraisers or appraisal companies anymore. In fact we are blind in the process.  While we do collect the money for the appraisal and we order it and pay for it from the Appraisal Management Company that serves a particular lender, that is the end of our participation in the process. The AMC sets the pricing for an appraisal and handles all the communication with the appraiser. As a lender we can send messages through the AMC for the appraiser but we are not allowed to speak directly to any appraiser. So if the money isn't paid-the appraisal doesn't happen.  A credit is issued at closing for the appraisal-but it will have already been paid for.  Once the appraisal has been done no matter what the result, the appraiser has done his work so is entitled to be paid.

  Depending on what the appraiser finds, while unusual, the appraiser may feel there is cause for further inspections to assure the lender that the home is sound and in decent condition.  The most common of these might be a roof or structural inspection. Those additional inspection costs are incurred many times by the buyer-though it is not uncommon for the seller to pick up the tab for those as well.

  Other costs that may be incurred are moving expenses or the cost of temporary housing if your lease is up prior to being able to take possession of the home.

  100% financing sounds great-and it is but 100% financing shouldn't be confused with no money out of pocket. Buying a home for nothing is a fantasy that is sold by late night hucksters.

                                      orlandograce.org

   Be sure to have some money set back no matter how much you intend to put down. You will need it.