CNC Mortgage Blog

Over the weekend I found myself trying to put a purchase by a first time home buyer in perspective. I find that sometimes I am a bad salesman because I don’t want to rush things. Here is a summary of my advise to all involved, with some changes to protect privacy. The buyers and the loan officer are in a hurry to get the appraisal done.

Hi everybody,

I had the privilege of talking to almost involved in this purchase today. I just missed Jodie.

Buying a house is a stressful experience, for everyone, with tax credit deadlines looming, it only makes it worse.

I wanted to summarize what I see now after my chats with all of you.

Jodie and David have found a house that they really like and want to buy.

The sellers have agreed to this sale, but they are underwater. They owe more on the house than the buyers are offering (maybe close to $100,000.) So this is considered a short sale which means that the bank that is holding the mortgage has to agree to receive less money than is owed on the house. In addition to the bank there is also a mortgage insurance company involved that has to agree to the short sale.

Banks are slow to look at and accept short sales, and we on the buyer’s side have very little leverage to make them speed up.

A purchase agreement has been signed by the sellers but not by the financial institutions involved.

I see two advantages to ordering the appraisal soon:

1. Appraisers at Bank of Sometown are slow these days

2. The loan application can move to manual underwriting to approve David and jodie as soon as the appraisal is received

There are 10 reasons to delay the appraisal:

1. We don’t know if the banks will approve the short sale at that price in a timely manner

2. David and Jodie cannot offer more money for the property

3. The listing agent might not allow the appraiser to go into the house until we have bank’s acceptance

4. $400 are at risk, if the appraisal is done and the banks don’t accept, the money for the appraisal will be lost

5. Another $400 will have to be spent for an appraisal on another house

6. There are many other houses on the market

7. With the April 30 deadline looming for purchase agreements to be signed, if this deal falls through there is very little time left to take advantage of the $8,000 credit.

8. There is no guarantee that the bank will sign the purchase agreement by April 30. Yes it could take that long!

9. David and Jodie should have two or three back up houses so that they can take advantage of the tax credit.

10. This house is still in the redemption period. Although it appears abandoned we are not sure of that status for the closing date.

11. We are not sure when the redemption period is over.

I am sure I will think of other reasons to add to both sides of the argument, but for now let’s take the weekend and think things over calmly.

Good luck