It’s here, the time to purchase a bank owned property. There are much more active buyers bidding on a home. The need to wait for a short sale or an auction sale isn’t necassary. Banks are asking for at least 10% -down payment and properties to be sold in an as is condition. Make a trip to the city, where the property is located to see what are the pending violations, if any.
Most loans which are 10% down payment require Private Mortgage Insurance (PMI). The lender programs may have the option of including the PMI on the rate (in the form of a higher rate), or may include a seperate monthly private mortgage insurance premium along with the mortgage payment (its about aproximates .82% of the loan amount and varies by insurer). The difference is, adding it to the rate makes the payment lower. The downside is when you do have the 20% equity you would have to refinance the loan rather than on a monthly premium you would just call the bank and ask them to remove the monthly PMI premium. It would be wise to you ask your loan officer to give you the different payments and make your decision accordingly.
Be prepared, by being buyer ready in these times of multiple offers we suggest the following:
Consult a loan officer to give you a “good faith estimate” (make sure you get a copy of your credit report)
A good faith estimate will show an itemized estimate of all fees involved in closing the mortgage loan
Receive a qualification letter from the loan officer.
Do not disregard an “as is” purchase. Most purchase agreements allow an inspection time frame.
Bank owned properties in many occasions just need paint, carpet, and minor maintenance.
Building sweat equity is what matters.
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