New government program helps with short salesPosted: Updated:
Before the housing boom, Scott Wright and his family built a home in Apache Junction from the ground up.
A few years later, prices in their neighborhood - like so many - took a nose dive.
Wright told us, "The neighborhood almost swallowed us financially and there wasn't much we could do about it."
Wright says his family, foreclosure was not an option, "We've always been current on home, very faithful because this is where we live."
He wanted to do a short sale - unload his now overpriced mortgage - and move - especially since there are such great deals to be had right now.
Previously, if you did a short sale, you'd have to wait three years before you could buy another home. But all that recently changed.
"I had to read this about five times, it sounded too good to be true," Dean Wegner from WJ Bradley Mortgage Capital Corporation in Scottsdale said, "We'd been waiting for something like this to happen.”
Wegner is talking about a new government program that allows people to do a short sale and move to another more affordable home, with no penalty, so long as their payments are current.
“Right now one out of every three homes is upside down, this is going to continue for 10 years, so the next decade of housing will be suppressed unless a program like this opens up the buyer pool and people can start buying and selling homes again,” Wegner said.
Scott Wright and his family didn't waste any time. They hope to start again, in Queen Creek.
Keep in mind, the program only applies to homeowners who are current and have no late payments. Also, make sure you get pre-approved. You must also have a minimum 620 credit score. The program is limited to sales prices of about $360,000 and you must pay 3.5% of the home price as a down payment.
Here are seven additional tips to remember before entering the program from Dean Wegner:
1.) Before you decide to sell and move, make sure you have the purchase side approved, seek out a quality mortgage banker and ask to get pre-approved vs. pre-qualified. You want to make sure your 100% approved before you sell your home.
2.) Interview 3 Realtors to list your home for sale. Short sales can be VERY tricky and you can expose yourself to liability. Many local law firms offer a free 1 hour consultation, it is advised to seek legal advice. Make sure everyone in the process is a pro and knows what they are saying and doing.
3.) No need for heavy up front fees. Your Realtor may charge a small fee up front to list your home. Anything above $250 is unreasonable. Watch out for predatory sales tactics to entice you.
4.) It will take time, be patient and know this is an incredible remedy to right-size your housing situation.
5.) If you have been in your home for 5 years or longer, you may qualify for the $6,500 Home buyer credit. You have until April 30th to get your new home under contract and June 30th, 2010 to close.
6.) This is an FHA program, to learn more go to: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf
7.) Make sure all your payments are current, just because your home is under contract does not mean you can stop making payments - STAY ON TIME!!!!!