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Attention Indianapolis Home Buyers!  FHA Monthly Mortgage Insurance Increasing on 4/18

Just a reminder that the FHA monthly mortgage insurance premium is increasing on April 18th.  If you are going to use FHA financing and have an Indianapolis area property you're considering purchasing -- don't wait.  Getting an address to a lender so they can pull a case number before the 18th will save you money.  

If you haven't found the "perfect place" yet -- don't dispair.  Yes, your monthly FHA mortgage insurance will be a little higher, but there are other options.  You may want to consider saving a little extra so you can put down an additional 1.5% and use Conventional Financing.

                            New Monthly Mortgage Premiums

   90% LTV            95% LTV                97% LTV

FHA              1.10%               1.10%                     1.15%

Conv              .49%                 .67%                       N/A

(FHA minimum down payment is 3.5%, Conventional minimum down payment is 5%)

Give us a call for more details!

Indianapolis Short Sales -- Are They Good Deals?

Maybe!  Many buyers think banks own Indianapolis short sale properties, thus they set the list price.  They don't.  (For more information on this, read Part 1 in this short sale series -- What is a Indianapolis Short Sale?.)  The seller is still the actual homeowner, so it's the seller who actually controls the list price. 

But since Short Sale offers are contingent on approval by the
seller's lender, it is the lender who ultimately determines the
sales price which they are willing to accept on a short sale based on their guidelines and a current appraisal.  Once this value is determined they will either reject, counter or accept an offer.  If accepted, they will issue a short sale acceptance letter to the homeowner along with not only the accepted price but other terms such as the closing date and possibly the requirement that the seller agree to a promisory note to make up some of the difference between the approved sales price and the mortgage balance.  The homeowner has the option to accept the terms of this agreement or allow the bank to proceed with foreclosure or deed in lieu.    

So the big question is, what price is the bank willing to accept in order to get the deal done and avoid the expense of foreclosure?  In a perfect world, there would be published guidelines as to what the "usual" or "normal" amount might be, but unfortunately, the world of short sales is anything but "usual" or "normal".  

So you see, it depends on the circumstances of each individual Indianapolis short sale and how motivated and realistic the bank is as to what the true market price is and what they are willing to accept. 

And it's not just the price that makes a short sale a "good" or "bad" deal. It's often how the short sale is handled by the listing broker and bank. When working with buyers who are considering purchasing an Indianapolis short sale, we open a dialogue with the listing agent prior to showing a short sale to determine the individual details.  Here are some of the variables we want to know about in order to evaluate whether or not a short sale is a "good deal".

1.  How many mortgages are on the property?  If there is a second, the approval process will be more difficult.  A second only receives $3000 from a short sale, so they
often elect not to participate or require the buyer or seller to bring additional funds to closing to make up the difference between the 2nd mortgage balance and the $3000.  This is often a deal breaker.

2.  Which Banks are involved?   Local banks tend to know the local market and can make decisions more quickly.  If there are two mortgages it may be easire to get an approval if the same bank owns or services both loans.

3.  How many offers will be sent to the bank?  Short sale offers are handled differently
depending on the bank and listing agent.  For the buyer, the best scenario is to have one primary offer accepted by the seller and sent forward to the bank.  The bank may still counter the offer, but at least the buyer doesn't wait for weeks or possibly even months, just to have another offer submitted at the last minute. 

4.  Homeowner Occupied?  Although short sales are usually sold "as is", if the seller is still living in the property (and usually they are) then the condition tends to be less
risky.  The utilities are still on, the lawn is mowed, general maintenance is more likely to be taken care of, vs. an empty home which may or may not have been properly winterized, has overgrown landscaping, flooded basement etc.

5.  Are there other liens on the property?  A title search should be completed when the property is placed on the market, but this isn't always done, and even if it is, the seller may continue to acquire additional liens (Federal Income Tax liens, contractor liens, etc) that may not be discovered until the last minute.

6.  Has the homeowner initiated the short sale documentation with the lender?  The bank will require the homeowner to submit financial documents supporting their financial hardship.  If this has already been intiated, or better yet, completed, then the process will move more quickly.  If not, it could be months before the bank responds to an offer.

Basically, there are some great Indianapolis short sale deals out there, but as you can see, there are also risks, they take longer and often there are headaches along the way.  But it's precisely these risks and headaches that make the prices more attractive.  If it were easy to buy a short sale, everyone would! 

An experienced short sale agent helps buyers understand and evaluate the risks.  They also explain the differences between short sales and other types of distressed sales, such as Bank Owned properties or HUD's and how each works with the seller's goals and timeframes.  After looking at all of the options, weighing the risks and benefits, some buyers will decide the reward is worth the risk, while others will determine that the whole "distressed" sale market isn't for them. 

The good news for all buyers is that these distressed sales are forcing non-distressed sellers to lower their prices in order to remain price competitive.  So even if you decide a short sale isn't for you, it's often possible to find a beautiful home where the sellers are motivated and have priced below market value.  And that's a great deal too!

Other related articles:

Part 1 - What is an Indianapolis Short Sale?
Part 2 - How to Buy an Indianapolis Short Sale

Contact the Hoagland Group at 317-340-4575 to find out more details on Indianapolis Short Sales, Greenwood IN Short Sales, or other central Indiana Short Sales.

Originally posted on Hoagland Group Active Rain Blog