Tag: lender

*/?>
Categories
Mortgage News Matters

What are the Pros & Cons of Selling a Short Sale for Sellers

Though they are not necessarily an ideal situation for sellers to find themselves in, short sales can be beneficial to financially distressed sellers looking to avoid foreclosure.

What are the benefits of a short sale for sellers?

  • Seller can avoid foreclosure. A short sale is one of the last options that a seller has before going into foreclosure, which is more detrimental to their credit.

  • Save on common fees. Sellers can avoid paying common fees, like the cost of a realtor’s commission if they sell their home with a short sale.

  • Possible debt forgiveness for the seller. In certain cases, the lender will accept the money made from the short sale and forgive the seller’s remaining debt. It is important to note that, in some cases, a short sale will not eliminate a seller’s debt if the lender chooses to get a deficiency judgement against the seller for debt owed.

  • No barrier to re-enter the housing market. With a short sale, sellers are eligible to re-enter the housing market if they wish to purchase a new home with an FHA loan, in some circumstances.

What are the drawbacks of a short sale for sellers?

  • No negotiation power. When a seller decides to sell their home through a short sale, they are relinquishing any negotiation power they may have had because the sale is now in the lender’s hands.

  • Loss of profits. Because the seller still owes money to the lender in the case of a short sale, all the profits go to the lender.

  • Damage to credit score. Though the damage to the seller’s credit is much less damaging than in the case of a foreclosure, the seller will still experience a negative effect on their credit.

  • Delay in obtaining another mortgage. When a seller goes through a short sale, they are required to complete a waiting period anywhere from 2-7 years before they can qualify for a new mortgage.

  • Deficiency judgement. There are some instances when the lender will choose to sue the seller for the remaining money owed on the property in what is called a ‘deficiency judgement.’ If the lender chooses to do this, the seller will experience a hit on their credit, like that of a foreclosure.

Are you looking to sell your home through a short sale? To learn more, contact a VanDyk Loan Originator today!

Categories
Mortgage News Matters

What is a Short Sale?

for sale short sale sign in from of home

A short sale is when a financially distressed homeowner sells their home for less than the amount that they owe on the mortgage. In this case, all the proceeds from the sale go directly to the lender, and they either (1) forgive the remaining balance or (2) get a deficiency judgment, which requires the homeowner to pay the lender all or part of the difference between the sale price and mortgage amount. In certain states, the difference must legally be forgiven in the case of a short sale.

Key points of a Short Sale

  • A lender must approve a short sale before it takes place.
  • The lender, or bank, requires documentation explaining reasons for the short sale.
  • Short sales typically take up to one full year to process due to a laborious paperwork process.
  • Are not as detrimental to a homeowner’s credit rating, as a foreclosure.

When does a home go into a short sale?

A property will go into a short sale (pending the lender’s approval) when the homeowner can no longer afford to make the mortgage payments. Rather than go into foreclosure, which is more damaging to one’s credit, the homeowner can initiate a short sale process by submitting an application to the lender.

When determining whether to approve a short sale, the lender will look at the following factors:

  1. The home must be worth less than the amount that the homeowner currently owes on it. The lender will often review sales of comparable properties, to make sure that the decision is sound.

  2. The seller must be able to prove they are financially distressed. This requires the seller to show the lender proof of insufficient income or assets to pay the outstanding loan amount.

    It is important to note that the source of the homeowner’s financial trouble must be new and not something they were previously withholding.

To learn more about short sales, contact a VanDyk Loan Originator today!

Categories
Mortgage News Matters

4 Benefits of Downsizing to a Condo

condominium building set on a bright blue sky

Downsizing from a home to a condominium is a great option for homeowners who find themselves using less of their space, looking to downsize, or simply interested in a home that requires much less maintenance to take care of.

Significantly smaller than a typical home, a condo can be a townhouse, loft, or high rise, and often includes additional costs, like homeowner’s association fees and homeowner’s insurance.

To help you decide whether this choice is right for you, we’ve decided to share four of the major benefits of downsizing to a condo.

What is a Condo?

A condo, or condominium, is a privately owned unit within a community of other units. Like an apartment complex, a condo is part of a larger building. However, unlike an apartment, residents are the owners of their own unit, rather than merely renters.

What are the Benefits of Downsizing to a Condo?

  1. Pricing. Depending on your market, owning a condo can often be more cost-efficient than owning a home. It is said that in rural areas, single-family homes appreciate at a greater rate compared to a condo of the same size. However, in cities, condos rise in value quicker than single-family homes located further from the city center. It is important to keep location in mind when looking for the best pricing.
  • Less Maintenance. Significantly smaller in size, condos require relatively less maintainance to take care of than a home. This gives residents more time to spend doing the things they enjoy.
  • Onsite Amenities. Like an apartment complex, condos often have onsite amenities like pools, gyms, and community areas – to name a few. Residents pay HOA fees that cover costs like maintenance of these common areas, so they can enjoy these amenities without having to worry about upkeep. 
  • Sense of Community. Condos are set up like little neighborhoods. They often become close knit communities where everyone feels a sense of trust and belonging. This can be a relief for many who like their independence but also want to feel a sense of community.

Considering downsizing, but aren’t sure if a Condo is the right choice for you? Check out our upcoming blog on the benefits of downsizing to a townhome.

Categories
Mortgage News Matters

What Does a Lender Look for When Approving My Loan?

business professional holding clipboard that says 'contract'

When beginning the pre-approval process, most lenders are looking for a few major things: Credit History, Capital, Employment, and Collateral.

  1. Credit & Credit History. Lenders will use your current credit and past credit history as an indicator of your ability to repay your debt. They will look at how much you currently owe, how often you borrow, how often you pay your bills – and if you often pay them on time, as well as how well you live within your means. To check your credit score, visit annualcreditreport.com.


  2. Capital. Capital tells the lender how much money you have, to put towards your down payment, as well as funds that will remain in your accounts after closing to be used for reserves. This includes such things as moving expenses, money required to turn on utilities, emergency repairs, or cost of ongoing maintenance. This is crucial information as you begin your home buying journey and apply for a loan.


  3. Employment. Employment tells the lender approximately how long it will take you to pay back your debt. They will check things like your previous employment history, as well as your current employment situation. Lenders are looking for stability in your income earnings trend to help determine its likelihood of continuance.


  4. Collateral. Collateral protects the lenders in the case that borrowers are unable to repay their loan. This is equally important to lenders as credit, income, and employment, as it acts as a safety net in the unfortunate circumstance that the loan is unable to be paid.

For more information on the Loan Application and Loan Process, contact your local VanDyk Loan Originator today!