This great article by Bob Lachance From ShortSale Daily News highlights the ever increasing importance of knowing the soundness and capacity of your end buyers’ lenders. Remember. If the BUYER cannot BUY then the short sale will FAIL.
The Importance of Prescreening Your End Buyer’s Financing
Written by Bob Lachance Articles, Mortgage & Real Estate News, Real Estate Business Mentors Aug 13, 2009
This week I will be going over the importance of pre-screening your end buyer and their financing.
Just so I am clear, this blog has to do with a traditional short sale where we buy a property (via a short sale) then we resell it. Here are 3 points to look out for while pre-screening your end buyer’s financing:
Point #1
If you are buying a property with the intent on reselling it within 90 days of your purchase, then make sure your end buyer does not have an FHA insured loan. The reason being is that an FHA insured loan requires title to be seasoned for 90 days.
Point #2
If you are buying a property with the intent on reselling it within 90 days of your purchase, make sure you disclose to the end buyer’s lender that your intent is to buy it via a short sale and then resell it for a profit. This is exactly what we do and it makes the transaction smoother and it will allow you to make sure this does not blow up at the closing table because the end lender had an issue.
Point #3
If your client is only putting down 5% on a conventional loan, make sure to ask the loan officer if the county that the property is located in has been flagged as a “declining market”. Around 90% of all Counties are flagged as “declining markets”. The main reason we want to know this is because the buyer will have a very challenging time getting mortgage insurance (MI) unless they put down another 5%!
With that said, I’ll see you next week with the latest news from the trenches!
Tags: 90 days seasoning, buying and reselling, end buyer lenders, FHA rules, lenders, no seasoning issues, Short Sales
