But what about second-time home buyers? What about people who are looking to expand their real estate portfolio? And just how many FHA loans can one have? We’ve got all of these answers and more useful tidbits on FHA loans below. Let’s get into it.

Can I get an FHA loan more than once?

When it comes to a lifetime allotment of FHA loans, we’ve got good news: The limit does not exist. Simply put, you can apply for and receive multiple FHA loans throughout your lifetime.

However, carrying more than one FHA loan at a time? The rules advise against that.

Of course, this rule makes sense when you remember that FHA loans are intended for home buyers who are looking for a primary residence — not a vacation home or rental property. So, generally speaking, if you want a second FHA loan, you’ll need to pay off the first one.

Rules can be flexible though, and exceptions may apply to that rule if you meet specific criteria, such as:

• Your new home is more than 100 miles from your current home. Ever heard of the 100-mile rule? You may be able to qualify for a second FHA loan if a new work opportunity requires you to move at least 100 miles away from your current one, for example..
• Your family has grown significantly since you bought your home. There’s only so far you can plan ahead because life can be unpredictable. If your two-bedroom home becomes too small as you grow into a family of five or six, then you may have a case to qualify for another FHA loan.
• You’re a co-borrower on an FHA loan, but you want to buy your own property. Things change. Plans change. Perhaps you’re going through a divorce and are on the market, or maybe you bought a home with friends and have realized you need more personal space. In cases like these, you may qualify for a second FHA loan.
• You’re buying a HUD real-estate owned (REO) property. In this instance, if you’re looking to invest in an FHA-foreclosed home, you’ll need to put down at least 25% — which may counteract one of the main benefits of an FHA loan: Lower down payment requirements.

How can I qualify for multiple FHA loans?

Understandably, your mortgage lender will want to know that you can afford to repay more than one home loan at a time.

Like you did for your first FHA loan, you’ll need to meet the minimum credit score, debt-to-income ratio, and down payment requirements to qualify. On top of that, your lender will check your income and assets to make sure you’ve got the funds to back the buy. You’ll also need to be clear of any foreclosures for at least three years to qualify for another FHA loan.

Depending on your credit score, you could put down as little as 3.5%. Keep in mind, you’ll need to pay mortgage insurance (MIP, or your mortgage insurance premium) throughout the life of each of your FHA loans. Unlike other loans, which offer the ability to remove mortgage insurance after meeting certain requirements, FHA MIP stays with you for the life of the loan unless you refinance into something like a Conventional loan.

If the reason for your second FHA loan is to accommodate your growing family, you’ll need to provide evidence that your current home doesn’t meet your needs anymore. In this case, you’ll need to have at least 25% equity in your current home to be eligible for a second FHA loan. If not, you’ll either have to pay the principal balance down further, or use other loan financing.

What are the alternatives?

If you don’t want to hold two FHA loans at the same time, there are other options to consider. You could:

• Sell your current home
• Refinance your current home to a Conventional loan
• Rent or lease a new home until your current home sells
• Buy a new home with another loan type

Pro tip: If you need flexible qualification standards, a USDA loan can get you in a home in a rural area with no down payment requirement.

So, what’s next?

FHA loans are an incredible option for home financing, whether you’re looking to buy or even refinance your current loan. FHA loans are especially popular with first-time home buyers because of their flexible credit, income, and down payment requirements. If you’re interested in learning more about FHA loans, contact us today to chat with one of our experts.

You can get multiple FHA loans throughout your life. However, the general rule is that you can only have one FHA loan at a time.

The post How Many FHA Loans Can You Have? appeared first on Cardinal Financial.

SMART Goals for Buying a House

Ever try to put furniture together without the instruction manual? Might have worked out. But, it just as likely ended with a backward side panel on your dresser or wobbly joints on your chair. One thing’s for sure, the process took longer than if you would have just followed the manual.

You can think of SMART goals for buying a house like instructions for making your dreams come true. Take a bit of time to map out your plan of action and your likelihood of success will shoot through the roof (probably the roof of your new house).

Here’s how to do it. Plan out each part of the SMART goal acronym and you’re on your way:
S- Specific
M- Measurable
A- Achievable
R- Relevant
T- Time-Based

Specific – What Do You Really Want?

Be specific and detailed about what, exactly, you want in a home. Knowing the particulars will help you plan the rest of your SMART goal. We’re not just talking bed and bath combinations—it’s much more than that. Is there a specific town or neighborhood you want to live in? Do you want some outdoor space? What about a dine-in kitchen? Or a dual vanity in the bathroom? Think critically about your lifestyle, your finances, and how your current place is or isn’t working for you. Then, map out your wants vs. needs.

Specific – I plan to buy a 2-bedroom home with a gated yard (for Buster, of course) and a work commute under 30 minutes.
Not Specific – I plan to buy a house.

Measurable – Get to Know Your Finances

One of the most powerful tools for success? Measurement. If you want to become a better long-distance runner, you’d track your mileage gains over time. The same is true for your SMART goals for buying a house. Measuring your progress is key (to your future front door).

Start by taking stock of your current credit score, existing debts, and savings for a down payment. From there, you can set measurement milestones. Consider picking one area of focus that could be most impactful to your home purchase. Don’t have a down payment accruing? That could be your 2022 focus. Think your student loans might seriously hinder your borrowing power? Commit to increasing your monthly payment (reduce the amount owed) by a set amount. Worried your credit won’t qualify you for a mortgage? Make a detailed plan to pay down your balance.

Measurable – I will save an additional $10,000 for my down payment by scheduling a monthly auto-deposit of $833.33 into my savings account.
Not Specific – I will save for my down payment.

Expert Tip: Not sure which financial factor to focus on? Reach out to a mortgage professional for a free home loan evaluation. They can help guide your goal-setting.

Achievable – What Can You Afford and When?

As far as we’re concerned, the A should come first. But, we guess ASMRT doesn’t roll off the tongue quite as well (try saying it – it isn’t pretty). This essential step exists to ensure you can accomplish your goal. Say you don’t have a down payment saved, but you’ll need at least 3% of the home’s value to qualify for a mortgage. Can you truly swing the monthly savings required to make that happen? Same goes for timing. When you think through all the details, does it really make sense to buy a home in 2022? If even one of your answers is, “no,” the S, M, R, and T don’t matter at all.

Relevant – Homeownership in Context

It’s worth considering your short-term plans and your long-term vision for your life. The “relevance” step of SMART goals for buying a house establishes where homeownership fits in. Is traveling the world a priority in the coming years? Well, wanderlust might push buying a place to the backburner. Committed to starting – or expanding – your family soon? Then, homeownership is about as relevant as it gets.

You don’t want to pull yourself (or your finances) in too many directions. One huge direction is enough, thank you very much.

Time-Based – When Can You Start Shopping?

You’ve been planning to organize your junk drawer for years. Somehow, the task always seems to get tucked under other, more appealing, time commitments. And that new exercise routine… starting it in 2023? Us too.

The problem isn’t that cleaning a drawer or exercising are unreachable goals. It’s just that you probably haven’t established a timeline for either. Time-stamped milestones can have a mansion-sized impact on making your homeownership dream happen.

Expert Tip: Don’t stop at setting your house-purchase date. Define deadlines for each step of your goal. Even better? Add each milestone to your calendar.

Time-driven –

• I will narrow down my search area to 5 neighborhoods by March.
• I will find a real estate agent and mortgage professional by April.
• I will improve my credit score by August.
• I will establish my home budget by September.
• I will start house hunting by October.
• I will own a home by December of 2022.

Less Time-driven – I will buy a house this year.

Making Your SMART Goal Happen

It turns out that SMART goals are more than smart. They identify crucial aspects of goal-setting and scaffold your success. Who’d have thought you’d become the author of your very own instruction manual? It’s time to do this home buying thing.

You can think of SMART goals for buying a house like instructions for making your dreams come true.

The post Smart Goals for Buying a House appeared first on Cardinal Financial.

For home buyers and sellers, here are a few real estate tips that might win you points with your agent.

When it comes to what real estate agents wish their clients knew about home buying and selling, we’ve heard the pain points. This isn’t an exhaustive list by any means, and every real estate agent will have different advice, but here are some helpful real estate tips your agent might tell you to help you have a more seamless experience.

Real estate tips for home buyers

1. Might want to get that starter home now

The market is highly competitive right now. And mortgage interest rates don’t seem to be getting lower anytime soon. To add to the mix, some homeowners are still waiting for the perfect home to float their way before they make the decision to buy.

Given the current state of home buying and selling, this isn’t the most practical mindset. In fact, it’s the kind of attitude that could keep people from homeownership entirely. If you’re serious about hitting your goal of buying a home, it might be wise to just get that starter home now. Then, you can either DIY and put in the sweat equity to turn it into the home of your dreams or sell it later in order to level up a house. Of course, this isn’t a decision to take lightly, so we recommend you consult your financial advisor before you think about buying a starter home.

2. The serious buyer gets pre-approved

Pre-approval is the part of the mortgage process where your lender checks your credit and verifies your income and assets with the intent of lending you a specific amount. This preliminary step gives you a clear picture of how much you can afford. A serious (and smart) home buyer will get pre-approved before they go on the hunt for a home—or before they enlist their real estate agent to do so for them. Pre-approval shows your agent that you’re serious about buying a home. And by knowing exactly how much you’re able to afford, it helps narrow down your agent’s search and saves both of you from wasting time looking at homes you can’t afford.

3. Be frugal well after pre-approval

Many home buyers start out with a very frugal mentality because they don’t know how much it’s really going to cost them to buy a home. They err on the side of expensive and pinch pennies. Up until they get pre-approved. Then, they find out how much they can afford, realize it’s not so bad, and go opening new lines of credit and making purchases for the house they don’t yet have.

We can’t tell you what to do, but it’s best to avoid taking on more credit card debt and opening new lines of credit until after you’ve closed on the home. For one thing, we know you’re excited to furnish your home, but such frivolous spending can get you into trouble later. For another thing, your mortgage lender will pull your credit again toward the end of the process. New debt will have to be worked into your debt-to-income ratio. If your ratio was already close to the maximum allowed by lending guidelines, it could potentially result in loan denial.

4. I can’t tell you everything about the neighborhood

Every home buyer wants to know about the neighborhood they’re buying into. It’s normal to ask questions about the neighborhood’s characteristics: crime rate, diversity, economic status, and so on. These are honest questions that every home buyer is bound to have. What your real estate agent will most likely tell you is that they can’t give out that information—that would violate the Fair Housing Act. But what they may tell you is that you can find out for yourself.

There are plenty of trusted websites with those kinds of statistics, or you can ask around and see what the neighbors have to say. Just know that, if you ask the neighbors, you’re going to get their personal perspective, not necessarily unbiased data. There are many ways you can find out neighborhood demographic information, but you’re not going to get it from your agent.

There are many ways you can find out neighborhood demographic information, but you’re not going to get it from your agent.

5. Ask about flood insurance

Flooding is the most common natural disaster in the U.S. and, believe it or not, it affects every state. According to FEMA and the National Flood Insurance Program, flooding isn’t just caused by excess rainfall. It’s also caused by “dams or levees breaking, new development changing how water flows above and below ground, snowmelt, and more.” And with the hurricanes and flooding we’ve had in the last decade, FEMA is making more flood map changes and expanding flood zones.

While this may be good and safe for homeowners, it’s also increasing flood insurance mandatories, adding an expense to homeownership. What might your agent say? Don’t be blindsided by flood insurance premiums. Asking about whether the property you’re interested in is in a flood zone should be as routine as asking how many bedrooms and bathrooms it has. The idea is to be prepared. If you know ahead of time that a home you like requires flood insurance, you have the chance to either prepare yourself mentally and financially for that added expense or pass up that house and find a different one to pursue.

Asking about whether the property you’re interested in is in a flood zone should be as routine as asking how many bedrooms and bathrooms it has.

6. It’s not over until it’s over

Read it again: it’s not over until it’s over. It’s not time to celebrate until final funding goes through. Even if you feel like everything is in your favor and you’re confident that this house is yours, anything can happen over the course of the buying process—even up to the day you sign. Stay nimble and don’t get your hopes up until everything is said and done. Your real estate agent will appreciate your level-headedness and you’ll be glad you didn’t pop open the champagne prematurely.

Real estate tips for home sellers

1. Make sure the price is right

When you’re selling your home, it’s tough to come up with the right dollar amount. You may get nostalgic and think about all the memories you’ve made there . . . and how can you put a price on that? When deciding on a fair price to put on your home, don’t trust websites to do it for you. Remember, those are just estimates. They can be helpful, but you shouldn’t take that to the bank.

Don’t get attached to the number those free online calculators spit out. Trust your real estate agent to help you come up with an accurate amount based on nearby comparable homes. How might your agent weigh in? Price it to sell quickly, especially in this competitive landscape. Although the memories you’ve made are priceless, the house you’ve made them in is not. It’s ultimately about finding that balance between competing in the market and getting the price you deserve.

It’s ultimately about finding that balance between competing in the market and getting the price you deserve.

2. Don’t skimp on staging

Among the other to-do list items you have to tackle when selling your house, staging is one of the most important. Though, mentally, it may fall by the wayside, don’t let it. Take staging seriously. There are a few key principles to remember here. For one: depersonalize and declutter. You want home shoppers to be able to picture themselves living there, not you. Make sure your house is bright and illuminated, whether by opening the curtains or turning on the lights, or both. Clean like crazy and make sure the place smells good. You want to appeal to all the senses, not just the eyes. Some say baking cookies a half hour before the viewers arrive adds to the experience because, not only does your house smell amazing, you get to give away an unexpected sweet treat that turns out to be a pleasant surprise.

3. Your open house actually gives me more business

Real estate agents get a lot of business via word of mouth. You’re not just attracting potential buyers who may be interested in your home when you hold an open house. You’re inviting people who could potentially become your agent’s clients. During your open house, your real estate agent will be networking hard, passing out business cards, and trying to make connections. You may be welcoming neighbors who might sell their home later or home shoppers who don’t yet have an agent. Either way, your agent has a chance to meet these people and possibly gain their business.

4. I’m not made of money

This real estate tip goes for home buyers too. It’s a common misconception in the real estate world that agents make tons of money. And with that misconception comes the idea that a real estate agent can just *poof* magically make things happen. The agent is an advocate, but they’re definitely not made of money. And while some home sellers (and buyers) may feel like they’re writing a big check to their real estate agent, the truth is that the agent is only pocketing a small percentage of that amount. After splitting that check with their brokerage, they’re then putting some of that money toward various expenses like the sign in front of your house and access to the MLS. At the end of the day, they’re really only profiting a small portion of what you’re paying them.

5. It may take longer than you think to sell

Just like when you were buying your home, keeping realistic expectations is key. It’s a competitive market out there, and even though in past years it may have been faster and easier for people to sell their home, it might not happen the same way for you. Do you have an ideal timeline in your mind? It might not to go your way. A good home seller is a patient and prepared home seller—and one that makes the real estate agent’s job a little bit easier.

6. Don’t let a low offer get you down

We know you’ve made memories in your home, and no price tag can do that justice. But think about where bidders are coming from. They’re not coming from a place of nostalgia. Their perspective is looking out for their best interest and trying to get the best deal possible. You might be tempted to think that bidders who give low offers are selfish, but remember your agenda when you bought the place. You too were looking out for your best interest and trying to get the best deal possible. Just like buyers, sellers have to be savvy and nimble. Don’t get offended if you get a low offer. Work with your agent to counter-offer or decide whether it’s a fair price to accept.

Did these real estate tips help you in your home purchase or sale? Share this article with your friends and family!

The post Real Estate Tips Your Agent Wishes You Knew appeared first on Cardinal Financial.

Talk about taboo

When it comes to house hunting, there’s a handful of basic questions you should ask: How many square feet does the house have? How many bedrooms and bathrooms? Does it have a basement? Does it have a yard? Is it in a good neighborhood? Is it in a decent school district? How close is the nearest shopping mall? These are pretty straightforward.

Then there are the oddballs. The questions house hunters are asking (and secretly researching) that are rarely talked about. I asked my fellow colleagues in the CF Marketing department what are some things they (or their friends and family) have taken into consideration before buying a house. You might be surprised at some of the things they said.

1. are you allergic?

Have you ever thought about moving somewhere because of its beautiful foliage? Maybe you’ve considered moving to Georgia for its dreamy Spanish moss or New Mexico so you could have cacti and succulents in your backyard. While this is a factor for some, have you ever thought of the flipside? That’s right, some homeowners specifically don’t move to an area because of the foliage that’s native there.

Dry pollen is easily airborne, and trees like cottonwood, mountain elder, and willow can cause allergies to flare up in some people. Even stranger than researching trees in the area? Bees in the area. Matt Carter, Web Developer, has an interesting experience: “We found out in our research that the neighbor across from the house we were considering is a beekeeper, so they had to warn us in case we were allergic to bee stings.”

2. measure twice, buy once

Home buyers consistently make the mistake of buying things before they measure. In fact, my own friends bought an L-shaped sofa and couldn’t get it in their house. After trying to maneuver it for hours, they took a chainsaw to it and cut it into three pieces! “Really gives meaning to the word sectional. . . .” Copywriter Khari Pressley said.

But aside from measuring for normal things like sofas and beds, we’ve heard of homeowners measuring for some pretty strange items. “My buddy checked the requirements for a golf simulator to ensure it could fit before bidding on a house,” Digital Marketing Manager Elliott Antal commented. What are some other odd things we’ve heard home buyers measure for? Ceiling clearance for animal trophies; aquariums and terrariums; and pool tables, arcade games, and darts—for the man cave, of course.

3. the path of least resistance

Did you know that your daily commute can have an effect on your happiness and well-being? Several organizations in the UK have done research on the topic and an article from The Guardian gives some interesting statistics, stating that anxiety, happiness, and general well-being are affected by “each minute added to a commute.” If that’s the case, home buyers would be wise to research traffic patterns in the area, especially along the route from the home they’re considering to their job location. “It makes working from home that much sweeter—one less item to worry about!” Neil Camm, Web Developer (who works remotely) said.

4. did someone die in this house?

We know, it’s a little morbid. But house hunters have been known to ask their real estate agent (and the seller) this weird question. Here’s what Graphic Designer Kaitlin Larke has to say: “I know I would be checking to see if anyone had died in the house. I wouldn’t want the previous owner sticking around!” You can’t blame her, and neither does Marketing Assistant Amber Johnson: “If a house even looks haunted, I wouldn’t put a bid on it. I’m not taking any chances!”

5. can I check facebook from here?

It’s the digital age, so can you really blame home buyers for wanting a stable internet connection in their homes? “We found a big home for less than $200,000 that was on 19 acres. It had everything you could’ve wanted and it had been listed for months,” Carter said. “That made us wonder, Why hasn’t someone scooped this up already? We looked into everything, thinking something had to be seriously wrong with the place. Come to find out, there were no internet providers for miles.”

Larke has a similar story: “My uncle lives on the side of a mountain and he told me that new houses up there aren’t offered the option of internet access because the servicer refuses to go up there. So those big, beautiful homes have to figure out something else.” No internet? How will they ever survive?!

6. trying to channel my inner Emeril Lagasse

For some home buyers, the make-or-break factor in the decision to bid on a home is lurking behind the walls. A big one for most people? Lack of central air conditioning. To install central A/C in an old home requires lots of work and costs a lot of money. And if you find out the return on your investment isn’t worth it, it’s better to skip that house anyway. Another big one? Gas versus electric heating. “My cousin didn’t put in an offer on a house because the entire home was electric,” Creative Director Erica Lee said. “She refused to cook on an electric range and she didn’t want to make the investment to run gas lines to the house either!” Makes sense: you can’t practice your “BAM!” on an electric stove top!

7. pest control on speed dial

“I get why people live in the South. If you like warmer weather and sandy beaches, it makes sense. That is, until I heard homeowners in the Sunshine State get lizards in their homes. Not spiders, not ants—no, lizards. Thanks, but no thanks!” Graphic Designer Anthony Dean said.

Could pests and other native species really keep someone from moving to a certain region? It does for some, and it’s a question you’ll have to ask yourself. We’ve heard home buyers research everything from emerald ash borer to alligators before deciding to search for a home in that area. What’ll it be for you?

What’s one weird thing you researched before you bought your house? Tell us on social media!

The post 7 Weird Things People Consider Before Buying a House appeared first on Cardinal Financial.

what is a foreclosure?

Foreclosure is the process by which a mortgage lender can repossess property in order to repay outstanding debt if the borrower defaults on their mortgage. In the industry, we also use the term “foreclosure” to refer to the home itself, not just the process. Like short sales, foreclosures are often considered “distressed properties” because of the financial situation of the current homeowner and the physical condition of the property. Unlike short sales, foreclosures are riskier and they typically happen after the lender offers the option to short sale.

Here’s how it works: If the homeowner defaults, they’ll receive legal notice that the foreclosure process is about to begin. This gives them a chance to regain good standing and get back on track with their payments. If they can’t, they can either sell the property in order to avoid foreclosure or they’ll be forced to move out and their lender will repossess the property.

It’s not a pretty process, but there are pros to buying a foreclosure.

the pros of buying a foreclosure

It’s not a pretty process, but there are pros to buying a foreclosure. For one thing, foreclosed homes tend to come at a low price. That’s because the lender doesn’t want to hold onto the home and will likely be willing to offer it at a discount to get it off their books. For that reason, if you’re buying a foreclosure, you could get a great deal in a neighborhood that would otherwise be out of your price range. And yes, that means foreclosures are in all kinds of neighborhoods—even luxury homes can be foreclosed. So if every foreclosure you’ve pictured is a run-down shack, that’s not always the case. Some buyers are able to score really nice luxury homes at low prices.

In the best-case scenario, you pay below market rate for the home, the value appreciates, and you sell the property for more than what you bought it. It’s because of this benefit that buying a foreclosure can be a really good return on investment, especially if you’re in the market for flipping homes.

But if you’re not one for flipping homes and you’re just looking to buy a decent home at a super low price, buying a foreclosure could work for you. One advantage to this is that since the home is vacant, you don’t have to wait for the seller to move out. You get to come home faster and you get in at a low purchase price. Could there really be any cons?

If you’re buying a foreclosure, you could get a great deal in a neighborhood that would otherwise be out of your price range.

the cons of buying a foreclosure

For some home buyers, yes, there are cons to purchasing a foreclosed home. It’s a rigorous process that’s not for everybody, and definitely not for the faint of heart. If you choose to buy a foreclosure, buckle up for an impersonal process. The lender will often see it more as just a business deal so don’t be surprised if the involved parties are very forthright throughout the process (more on this later).

Buying foreclosures can also be very competitive. Since there are many buyers looking to snag a deal that they might otherwise not be able to afford, there tends to be higher competition for the property before it’s owned by the bank. Once the bank owns it, however, there’s not much room for negotiation because they set the price after they’ve taken care of things like eviction, tax liens, and repairs—efforts that demonstrate to their shareholders and/or investors that they’re offering the best price possible. If you bid below the bank’s price, chances are, you’ll be met with a counteroffer.

We mentioned the phrase “distressed properties” before—often the property is in poor physical condition because the homeowner encountered financial hardship, meaning not only were they unable to make their mortgage payments, they couldn’t afford to maintain the home either. And yet sometimes the home is in bad repair because the previous homeowner was negligent. Since foreclosure can be an emotional process with conflict between the lender and borrower, there’s a possibility for the homeowner to take out their frustration on the home.

Another con to buying a foreclosure is the delay in making an offer. It can take weeks to get a response from a bank or servicer, and consequently, this can affect financing. Most lenders have time limits on rate locks, so if your offer hasn’t been accepted and interest rates go up, the property becomes more costly.

how does buying a foreclosure work for the buyer?

Despite the cons, people buy foreclosures every year. That means, for some, the pros are greater. If that’s you, start by doing your research. You can start online just like you would for any other home search, but also check out special listings, public records, and the county courthouse.

Early on in the process, you might want to hire a real estate agent who has experience in foreclosures. They’ll have access to private foreclosure listings and a network of professionals they can connect you with. The process of buying a foreclosure is not your conventional process. You’ll want someone on your side who can help you navigate the tricky twists and turns of it. And like searching for homes online, your agent can help you research the recent sales prices of comparable properties (or comps) before you make an offer on a home. Then, based on the comps, you can write a more competitive offer and get closer to the price you want.

Sounds like a lot of research so far, and we all know that research takes time. That said, don’t be hasty about this purchase. Buying a foreclosure can be risky business. So heed the old adages: Take your time. Prepare for the worst. Don’t sweat the small stuff. And take it one step at a time.

how is it different from buying a non-foreclosure?

Remember that your experience buying a home is going to be vastly different from others’. Turnkey homeowners, for example, might have more wiggle room to go over their budget because their purchase is less risky. When you’re buying a foreclosure, you have to make a budget and stick to it. If not, it could be more costly for you in the end.

You should also keep in mind that this will also be a unique lending transaction. Depending on your lender, it’s likely to be a very impersonal process. For the lender, it’s strictly a business decision. They’ll only go through with the foreclosure if the numbers make sense for their bottom line. However, when you buy a foreclosure through Cardinal Financial, you’ll always get a personal lending experience. So get in touch with us and we’ll start by getting you pre-approved. Pre-approval is important to the process of buying a foreclosure. It’ll give you greater bargaining power when the time comes to make an offer.

Like buying a short sale, a foreclosure is an “as-is” purchase, so you can expect not to get anything that resembles a seller’s credit, discount, or the cost of any home repairs “thrown in.” When buying a foreclosure, there’s very little compensation for damages on the home, and consequently, very little room for negotiating post-home inspection repairs.

Three people you should know

And finally, as the buyer, there are three people you should keep handy. In addition to your real estate agent and mortgage lender, get a home inspector, a title company, and a lawyer.

1. Get a reputable home inspector. “Distressed property” and “as-is” should be keywords prompting you to not only get a home inspection but get one from a very reputable inspector. Your agent should be able to help you with this. Then, once you have your vendor, get a home inspection before you make your offer. This could reveal issues you’re not prepared or willing to handle and you may want to walk away. Better to know these things up front.
2. Get a title company that is well versed in foreclosures. The title company’s job in any mortgage process is to run a title search and report. This ensures there are no discrepancies with the title and no liens against the property. In a foreclosure, this will need to be a very comprehensive process. With such a unique transaction, there’s a higher chance your title company will dig up additional liens they’ll need to resolve.
3. You might also want to get a lawyer. While your real estate agent can give you great professional advice, they’re not exactly a legal advocate. When engaging in such a risky transaction, it can’t hurt to have a lawyer on your side.

Are you interested in buying a foreclosure? Call Cardinal Financial today and let’s get started!

The post Pros & Cons of Buying a Foreclosure appeared first on Cardinal Financial.

what is a short sale?

A short sale happens when a homeowner wants to sell their home but owes more on their mortgage than the home is worth. Usually, they opt for a short sale because they’ve fallen into financial hardship. In order to sell, they have to demonstrate their financial situation to the lender and show that they cannot pay off the rest of their mortgage, whether that’s in monthly payments or in a lump sum.

Before a homeowner can put their home up for short sale, their lender has to approve. Since they’re receiving less than the amount the borrower owes, it’s up to the lender to count the cost and determine whether it’s worth it to move forward with the deal. This is why it’s called a short sale, because the mortgage lender is agreeing to a “short” payoff.

If the lender approves, the home will be sold “as is,” meaning the lender will not fix any defects that would potentially cost the buyer substantial amounts. In addition, the lender oftentimes will not report the amount of short sale as a charge-off as they would with a foreclosure. This is a better situation for both the seller and the lender because foreclosure has more of a negative impact on the seller’s credit history and it involves processing fees that can be more expensive for the lender.

Sounds beneficial to the seller and the lender, but what’s in it for the buyer?

Before a homeowner can put their home up for short sale, their lender has to approve.

the pros of buying a short sale

Short sales and foreclosures are sometimes grouped together. That’s because both are usually done at the same time, and it’s in the process of foreclosure that the lender may allow the homeowner to short sale. But despite their similarities, there are some differences between short sales and foreclosures. For one thing, with a short sale, the seller tends to continue living in their home while it’s on the market. But with a foreclosed home, the occupant has to move out, leaving the home vacant and vulnerable to break-ins, vandalism, and neglected maintenance. Thus, buying a short sale is typically not as risky as buying a foreclosed home.

Another pro to buying a short sale is that, as the buyer, you may not have to deal with much competition. Since short sales can take some time to close, most home buyers aren’t willing to wait around long enough for the deal to be finalized. That said, if you want a speedy closing, buying a short sale is probably not the way to go (more on this later).

Finally—and probably the most enticing aspect of buying a short sale—the home will most likely come with a low purchase price. Since both the seller and the lender are motivated to sell the home as quickly as possible, they’ll probably list it for a low price so it sells fast.

the cons of buying a short sale

Like we said, if you want a speedy closing, buying a short sale is probably not the way you want to go. A short sale takes longer (we’re talking months) because of all the paperwork involved and the need for the lender’s approval. So if you’re set on a specific closing date or you have some sort of time constraint, you might not want to buy a short sale.

That’s not the only downside. Since the lender is already trying to mitigate their losses, they’re less likely to pay for any extra costs, which could make it more expensive for you at closing. And don’t expect the seller to cover any costs for repairs or give a seller credit at closing because their financial situation initiated the short sale in the first place.

Speaking of repairs, that’s another con for you to consider. Although you might be getting a good deal on the purchase price, be prepared because you may have to spend a lot of money on fixing up the home. That’s because the seller most likely doesn’t have the financial ability to make repairs or the motivation to do so.

There are good and bad points to buying a short sale, but when it comes down to process, how does a short sale work for the buyer?

Buying a short sale is typically not as risky as buying a foreclosed home.

how does a short sale work for the buyer?

Here’s how it works. First, you’ll want a real estate agent on your side who has experience with short sales. They’ll be able to research the listing before you even start the process and give you their honest opinion on whether this is a good deal. If you decide to move forward, they’ll also be able to communicate with you and the lender to find out exactly where the home is in the process. Since short sales usually take longer to close, you’re going to want an agent who knows what’s going on every step of the process and can communicate expectations with you.

Next, make sure you get a really good home inspector. Like we mentioned, one of the cons to buying a short sale is that there might be a lot of costly repairs you’ll need to make. A top-notch home inspector will be key in this process. And just in case the inspection reveals significant damage you can’t afford to fix, you may want to take preventative measures: partner with your agent to ensure your contract has the right language to give you to ability to back out of the deal.

Lastly, buckle in for a long ride. We can’t say it enough. This isn’t likely to be your quick-and-easy 28-day closing. But if the pros outweigh the cons for you, buying a short sale could be a great investment at a low price tag.

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