The Home Buyer's Korner

Information presented should be used for educational purposes only.

May 11th, 2015

Guy looking up in color

GREATER BILOXI~SOUTHEAST MISSISSIPPI

The Home Buyer’s Korner

Google+ RE Community

Google+ Mortgage Lender Community

Google+ General Contractor Communities

Buying A FNMA HomePath Property

Fannie MaeThe raging river of foreclosures and inventory of Fannie Mae HomePath properties that swelled to numbers never seen before until the great recession looks more like a swift stream of repossessions this year.

As a result, the deals you’re likely to find aren’t quite as compelling as they once were, but if you work with an experienced distressed home real estate agent you can find the right foreclosed home, you can still get a bigger, better house than you otherwise could afford or create some instant equity.

About five million homes have gone through foreclosure in the half decade since the housing bubble burst, but the rate of foreclosures are falling in many areas around the country. The Mortgage Bankers Association reports the percentage of homes in foreclosure at the end of September was at 2.39 percent and the lowest since 2007.

The National Association of Realtors found that nine percent of existing home sales were foreclosures or short sales. That’s down from 14 percent in late 2013 and 24 percent in late 2012.

With fewer foreclosed houses available, there’s good evidence that institutional investors and property flippers are leaving the market, but the reality is it opens the door for average home buyers to get in on some great opportunities.

The slowdown of a purchasing frenzy created by institutional investors and property flippers means average home buyers aren’t likely to face as much competition and that’s really good news. It create an opportunity for average home buyers who want something a little large that they might be able to afford otherwise or little instant equity, but it takes an experienced team of real estate professionals for most home buyers to accomplish their goals.

To fulfill your dream of home ownership and come out on the sweet side you need a real estate agent with Fannie Mae HomePath experience, and both a mortgage lender and a general contractor who can get the job done financing and renovating your new home with either an FHA 203K or Fannie Mae HomeStyle renovation mortgage.

Whether you’re interested in buying a foreclosure as a primary residence or to rent out, you don’t just want a cheap property, a savvy home buyer wants to create good value. The way to do that is:

  1. Purchase a home at a discounted value that Fannie Mae HomePath can supply by finding an experienced real estate agent;
  2. Qualifying for a low-interest rate/low down payment mortgage with renovation options included, like the FHA 203K and Fannie Mae HomeStyle mortgage loans;
  3. And employ a lender approved FHA 203K experienced general contractor who can get the work done on time and on budget.

If you’re serious about buying a great home and creating a little instant equity between signing a purchase agreement and moving in consider these options. 

  1. Never buy a foreclosure sight unseen and employ a real estate agent with distressed home purchasing experience. 

When you buy a repossessed home at auction, you usually can’t enter the property to assess its condition before you bid. At best, you might be able to view the exterior, peek in the windows and talk to a neighbor about the property’s history.

Without going inside and without an inspection, you won’t know what shape the home is in until you get the keys. At that point, any unexpected costs are yours and let’s face, it’s not a good way for the average home buyer to purchase a home.

Attempting to purchase this way also requires you have cash and you’ll still be competing against institutional investors and property flippers who are still milling around looking for the very best deals. Frankly, it’s a waste of time when you can employ a real estate agent who knows how to locate properties you can inspect and make sound decisions, while financing the purchase and renovation for just a 3.5 percent investment.   

Many times the previous home owner of a foreclosed home became frustrated facing eviction and has destroyed the plumbing; electrical systems; ripped out carpeting; punched holes in walls; stripped homes of kitchen appliances and even removed toilets to the hot water heaters.

All that may sound awful to you, but it’s really nothing more than an advance demolition if you think about it. When you’re looking at a distressed home, you’re looking at it bones and location, not that it’s missing a toilet or appliances you’d most like would have wanted to replace anyways. 

  1. Never attempt to buy repossessed homes without a real estate agent. 

First of all Fannie Mae HomePath won’t work with a home buyer without being represented by a licensed real estate agent. Fannie Mae depends on the expertise of a real estate agent and only accepts offers through their real estate listing agents.

When the home goes to auction and no one bids, or no one bids enough to cover the outstanding mortgage, the bank that holds the loan gets title and if the mortgage had originally a Fannie Mae mortgage ownership is transferred to Fannie Mae’s HomePath division. These homes become known as real-estate owned (REO) properties.

Fannie Mae will usually repair the worst damage and hire a real estate agent who specializes in foreclosures to market local properties for the agency. That selling agent will allow you to see what’s inside so that you know exactly what you’re buying.

Once you’ve found a home that you’re interested in, you’ll need to have a general contractor provide you with a bid for obvious repairs and include what renovations would give you the best future resale value that only an experienced real estate agent can provide.

Now you can determine how much to offer and whether or not any equity creation can be created or get the home of your dreams without breaking the bank. 

The main reason home buyers think they should shop for a foreclosure is to get a bargain and that isn’t always valid. In the past, foreclosure home buyers would take what they think is a fair price for a similar, but well-maintained home, subtract the cost of repairs and offer 80% of that amount.

Back then, the market had a glut of foreclosed properties, but that’s not the case everywhere, like it was. Your real estate agent can advise you about local market conditions and the ratio of foreclosed home to determine if including distress home view is a viable option or not.

Discounts aren’t as steep as they were a few year ago, but property values have stabilized, risk has been reduced with the stabilization of housing, but often enough good deals are still out their if you’re working with a real estate that knows how to find them.

The National Association of Realtors reports that foreclosed properties sold for an average of 15 percent below market value in October. In hot markets, “if the home is in a desirable location, you will have multiple bidders and the home will sell at or near market value.

But you can still take advantage of a few things working in your favor:

  1. Fannie Mae HomePath has no emotional attachment to the home;
  2. They don’t have irrational expectations about price;
  3. And Fannie Mae is losing money every day the house stays on their books.

Remember, the home’s real cost is the money you pay the seller, plus what you’ll spend on repairs and renovations. Set a firm maximum price that’s within your budget and near the property’s actual value. Be prepared to walk away if Fannie Mae won’t accept it. When coming up with a purchase offer build in a cushion of at least 10 percent above your general contractors bid for repairs. 

  1. Understand what it will cost to make the home livable. 

Fannie Mae REO’s more  often than not are merely houses that have sat empty and neglected for months, with dead lawns, peeling paint and other relatively minor problems.

However, overlooked issues can turn a great start into a nightmare. For $300 to $600, a home inspector can help you spot all a home’s problems. A home inspection is important with any home purchase, but especially with foreclosures. The American Society of Home Inspectors or the National Association of Home Inspectors can help you find a qualified inspector in your area.

You can make your offer contingent upon a satisfactory inspection and if any unnoticed repairs are needs have your general contractor update their bid and figure out if the offer still works.   

Make sure your offer includes a “subject to” clause that lets you out of the deal in case the appraisal your lender orders once you’re under contract comes in low. When you use FHA 203K to complete your renovations your appraisal will include both an “as is’ and “after repairs” value. If your offer to purchase was done right, you should be pleased with the after improved value estate you and your real estate agent had originally established as a goal to achieve.   

  1. Know what similar homes are selling for. 

Your real estate agent can find “comps” for the property you’re considering. You’ll get actual sales prices for similar nearby properties that have sold recently, not asking prices or the unreliable estimated values that Zillow creates based on real estate records.

You won’t always be able to tell the condition of the homes that recently changed hands — though sometimes listing photos are still available and can give you an idea, but you’ll be able to establish a range of prices, a typical price per square foot and an average price.

Eliminate any comps with extremely low prices. These may be transactions between family members that don’t reflect market value or other influences that simply aren’t reflective of overall values. 

  1. How much house can you afford? 

You don’t want to drain your savings by taking on mortgage payments you afford. With any home purchase, it’s important to know what you can afford before you start shopping. If you’ll be using a mortgage to pay for the home, having financing lined up is one of the best ways to prove to the Fannie Mae you’re a serious home buyer and increases your chances of having your offer accepted.

When you’re buying a foreclosure, taking this step is not optional. Get pre-approved before going to look at any foreclosure and have earnest money ready. Have a credit approval letter from your lender in hand. Almost all REO listing agents require this information when making an offer.

Taking this step will put you ahead of the pack if other bidders are less prepared. And if you’re up against cash buyers and you’re using financing, being able to prove you can close is your only shot at a winning bid.

Most lenders won’t lend you money to buy a home that’s in poor condition, so you want to work with a lender who specializes in renovation lending and offers the FHA 203K or Fannie Mae HomeStyle Renovation Mortgage Loan programs.

VISIT OUR SOUTHEAST MISSISSIPPI “HOMES FOR SALE” BOARDS

Livingston Homes for Sale

FIND HOMES THROUGHOUT SOUTHEAST MISSISSIPPI

HUD $100 DOWN PAYMENT HOMES IN MISSISSIPPI

USDA RURAL DEVELOPMENT HOMES IN MISSISSIPPI

FIND FORECLOSURES IN BILOXI AND SOUTHEAST MISSISSIPPI

FIND MORE FORECLOSURES IN BILOXI AND SOUTHEAST MISSISSIPPI

MISSISSIPPI HOME OWNERSHIP TOOLS

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Mortgage Loan Officers, Real Estate Agents & General Contractors are ready to assist you

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner;

click on “File”; then click on “Print”. In the center of the screen you will

have the option to “Create A Printable PDF of the Presentation”.

START YOUR PATH TO HOME OWNERSHIP TODAY

FNMA HomeStyle FNMA My Community Mortgage FHA One-Time Close Construction Portfolio or VA home loan Homes for Sale REO Short Sales FNMA HomePath Properties HUD Homes USDA Homes Condominiums Co-OpsTownhomes Manufactured Homes Modular Homes Mobile Homes Log Homes Second Homes Investment Property 2-4 Family Custom Home Builders Custom Built Homes General Contractors Home Improvement Experts Kitchen & Bathroom Renovations Real Estate Brokers & Agents Mortgage Lenders Federal Credit Unions Community Bankers Clarke County Quitman Enterprise Pachuta Shubuta Stonewall George County Lucedale Stateline to River Estates Greene County Leakesville McLain Harrison County Biloxi Acadian Court Estates Acadian Gardens Estates Alyeska Condominiums Anatole Bay Estates Ancient Oaks Estates Ascot Pointe Estates Ashley Acres Estates Barretts Estates Bay Cove Condominiums Bay Pointe Estates Bay Terrace Estates Bay View Estates Bay Vista Estates Beachwalk Estates Beau Chene Village Estates Beau View Estates Beauvior Park Estates Belvedere Heights Estates Belvedere Place Estates Benachi Estates Bent Oaks Estates Beverly Hills Estates Big Ridge Park Estates Biloxi Homes Estates Biloxi Real Estate Bluffs Estates Bradford Place Estates Branigars Gulf Shore Estates Brasher Bayou Estates Briarfield Estates Bridgewood Estates Burnett Estates Cayman Cottages Estates Cayman Cove Estates Cedar Grove Estates Cedar Lake Estates Channel Mark Estates Chateau Le Grande Estates Cherry Park Estates Cimarron Park Estates Clear Springs Estates Coral Gardens Estates Country Club Estates Coventry Estates Creekwood Estates Currie Estates Deer Cove Estates Desoto Trail Tradition Estates Destiny Plantation Estates Dogwood Hills Estates Eagle Point Estates Eastburg Estates Edgewater Cove Estates Edgewater Estates Edgewater Park Estates El Bayou Vista Estates Enclave Estates Fairfield Estates Fayard Place Estates Gaynel Gardens Estates Gill Estates Goose Pointe Estates Gorenflo Estates Greater Biloxi Estates Greystone Estates Heartsease Park Estates Hengen Place Estates Holly Bluff Estates Holly Hills Estates Hudson Estates Indian Hills Estates Indian Hills Estates Indian Trails Estates Iris Place Estates Irish Oaks Estates Janus Landing Estates Jeff Davis Place Estates Keesler Heights Estates Kellers Estates Knollwood Estates Kornmans Estates Kuhn Estates Kuhn`s Estates La Bonne Terre Estates Lake Villa Estates Lamey Acres Estates Langley Point Estates Longwood Estates Lopez Point Estates Magnolia Estates Magnolia Bay Estates Magnolia Bend Estates Magnolia Ridge Estates Malpass Landing Estates Malpass West Estates Margie Estates Millcreek Crossing Estates Miramar Estates North Haven Estates Oak Cove Estates Oak Park Estates Oak Ridge Park Estates Oak Shores Condominiums Oakridge Place Estates Ocean Club Condominiums Ocean Club Villas Estates Original Gulfport Estates Palm Ridge Estates Parkwood Estates Pass Road Gardens Estates Pelican Bayou Estates Pelican Cay Estates Petit Bois Estates Ponderosa Estates Popps Ferry Landing Estates Popps Ferry Place Estates Porteaux Bay Estates Pringle Estates Richland Park Estates River Oaks Estates River Oaks Estates River Place Estates River Plantation Estates Riverland Estates River’s Edge Estates Riverside Estates Riverwalk Estates Riverwalk North Estates Rock Creek Estates Rushing Oaks Estates Saint Giles Estates Santini Estates Savannah Estates Sea Breeze Condominiums Seal Estates Seawinds Estates Shadow Creek Estates Shorecrest North Estates Shorewood Estates Skrmetti Estates Southwind Resort Estates St. Charles Estates St. Paul Estates Stonebridge Estates Suburban Acres Estates Summerville Estates Sunkist Estates Sunkist Manor Estates Surburban Acres Estates Tanglewood Estates Taylor Oaks Estates Tee Vee Acres Estates The Oaks In Biloxi Estates The Village Tradition Estates Travia Estates Treasure Coast Condominiums Tux River Country Treasure Coast Condominiums Villa Tuscano Estates Virginia City Estates Wells Ferry Landing Estates Whispering Oaks Estates White Star Estates White Star Estates Wildwood Trace Estates Williams Estates Woodlands Estates Woolmarket Estates Woolmarket Acres Estates Woolmarket Village Estates D’lberville Jackson County Gautier Ante Bellum Condominiums Bay Woods Estates Bayou Oaks Estates Baywood Estates Cambridge Square Estates College Park Estates Dela Forest Estates Dellwood Estates Driftwood Park Estates Fairway Villas Estates Gautier Estates Greenbriar Ridge Estates Gulf Spring Estate Hickory Hill Estates Hickory Hill Manor Estates Hickory Hills Estates Hickory Hills Estates Hillcrest Estates La Ville De Court Estates Lakewood Estates Lakewood West Estates Lamotte Estates Linda`s Bluff Estates Little Bend Place Magnolia Bluff Place Estates Martin`s Bluff Estates Northwood Hills Estates Oakleigh Estates Oakleigh Place Estates Point Clear Estates Point Clear Rivera Estates River Oaks Estates Rolling Meadows Estates Sandlewood By Sea Estates Sea Cliffe Estates Shamrock Court Estates Shell Landing Estates Suters Camp Estates Water’s Edge Estates Westgate Estates Moss Point Belfair Estates Coda Road Estates Country Acres Estates Cox Estates Dantzler Estates Deer Creek Estates Dutch Bayou Estate Gautier Glenn Terrace Estates Griffin Heights Estates Harbor View Estates Magnolia Estates North Shore Estates Oakwood Estates Perkins Estates Pine Burr Estates Pineview Estates Quail Ridge Estates Riverlodge Estates Riverwalk Estates Riverwood Estates Santa Fe Estates Sawmill Pointe Estates Sherlawn Heights Estates Sherwood Estates Singing River Acre Estates Spring Acres Estates The Oaks Estates  Ocean Springs Acadian Village Estates Alto Park Estates Armand Oaks Estates Ascot Pointe Estates Ashley Place Estates Bacot Beach Estates Bayou End Estates Bayou Sauvolle Estates Beau Chene Estates Beaugez Estates Beaux Chenes Estates Bechtel Heights Estates Belle Fontaine Beach Estates Beverly Place Estates Bienville Place Estates Big Ridge Park Estates Braemar Estates Branigars Gulf Shores Estates Camellia Pointe Estates Canebrake Estates Chandeleur Place Estates Cherokee Glen Estates Clark Place Estates Clear Springs Estates Colonial Estates Culeoka Estates Cypress Creek Estates Davis Bayou Estates Deena Road Estates Dove Plains Estates Eagle Pine Island Estates Espana Woods Estates Ft Bayou Estates Graveline Point Estates Groveland Park Estates Gulf Hills Estates Gulf Oaks Condominiums Gulf Park Estates Guyton Place Estates Harbor Landing Estates Heritage Woods Estates Heron Bayou Estate Heron Park Estates Hidden Oaks Estates Hunter Pointe Estates Iberville Landing Estates James Way Estates Jordan Farms Estates La Place De Chenes Estates Lake Forest Estates Lake Forest Estate Lakeview Estates Lee Hail Estates Lemoyne Beach Estates Lover`s Lane Estates Madison Place Estates Magnolia Estates Magnolia Bayou Estates Magnolia Park Estates Martin`s Bluff Estates Martin`s Pine Hill Estates Maurepas Landing Estates Mimosa Cove Estates Monticello Woods Estates Mulberry Grove Estates Nelson Grove Estates Oak Bluff Estates Oak Cove Estates Oak Glen Marina Estates Oakleigh Estates Ocean Beach Estates Ocean Springs Estates Ocean Springs City Estates Ocean View Estates Old Ocean Springs Estates Omas Pine Grove Estates Orleans Place Estates Palfreyville Estates Palmetto Pointe Estates Park Place Estates Parktown East Estates Parkwood Estates Pecan Grove Height Estates Pine Hill Estates Pinehurst Estates Promenade North Estates Quail Creek Estates Ridge View Acres Estates Rosewood Estates Sanctuary Estates Savanna Trails Estates Seapointe Estates Skrmetti Estates South Breeze Estates South Pointe Estates St. Andrews On the Gulf Estates Stark Bayou Estates Suburban Acres Estates Sweetbriar Estates Sweetgrass Estates The Arbor Estates The Vineyard Estates Toscana Estates Treasure Acres Estates Trentwood Estates Twin Bayou Estates Village Estates Walnut Park Estates Waterford Village Estates Watersedge Estates West Ocean Beach Estates Whitney Oaks Estates Windsor Park Estates Windsor Place Estates Woodfield Estates Woodhaven Estates Woodland Hills Estates Woodlands Estates Woodsdale Estates Woodville Heights Estates Pascagoula Arlington Heights Estates Baptiste Court Estates Bayou Gardens Estates Beach Blvd Estates Bel Meade Park Estates Belfair Estates Brambles Estates Briarwood Estates Brookwood Estates Cherokee Forest Estates Delmas Estates Eastlawn Estates Ft Henry Place Estates Gulf Park Estates Gulf Shores Estates Hagueland Park Estates Harpersville Estates Inglewood Homes Estates International Ship Estates Krebs Estates Lakeside Estates Lincoln Heights Estates Longfellow Acres Estates Oakhurst Estates Ocean Beach Estate Pinecrest Estates Pinecrest Park Estates Plantation Estates Seabreeze Subdivision Shadow Wood Estates Stratford Place Estates Terre Verde Estates Twin Oaks Estates Two Mile Branch Estates Washington Avenue Estates Whispering Pines Estates Wiggins Bayou Estates Woodlawn Estates Kemper County De Kalb Preston Porterville Scooba Lauderdale County Meridian Broadmoor Estates Northwood-Poplar Springs Estates Russell Manor Road Estates South Side Estates Marion Wayne County Buckatunna Clara Waynesboro

Join us at Real Estate Social

Comments are closed.