Due to the recent decline in Real Estate values across the country, many people have found themselves with little or no equity in their homes/Real Estate, particularly those who bought through 2002-2005 with no money down.
A significant number of these Investors/homeowners bought their homes not only with zero money down, but with initial interest rates set at artificially low levels - so called "teaser" rates. This was the only way that many of these people could meet the monthly mortgage payments.
These "teaser" rates are only temporary of course. After two or three years they get re-set to a more realistic figure. These loans were set up with the assumption that house values would just keep increasing so that when the time came for the mortgage rate to re-set, the homeowner would have gained so much equity in the home, they could re-finance, perhaps again with a "teaser" rate. But homes started to decline in value rather than increase so many people found them in a situation they could not recover from.
In reality, the above scenario has only affected a small percentage of homes, but the numbers are high enough to have a significant impact on the real estate market.
Short Sales
When a homeowner discovers that they have no hope of affording their monthly mortgage payment, one approach they may take is to discuss the problem with their lender in the hope that the lender may agree to a "Short Sale". What this means is that the homeowner sells the home and after payment of all closing costs, the net amount remaining is insufficient to pay back the loan. In a Short Sale, the lender forgives that shortfall. The benefit to the homeowner is that they get to walk away from the home with no further financial commitment. Note that their credit rating will suffer as a result though.
Short Sales can be a good way for a buyer to obtain a home at a discounted price but there are many potential pitfalls. If you are interested in Short Sales, let me know and I will meet with you and provide you with a lot of relevant information.
Foreclosures
Often, a homeowner finding themselves in financial difficulty will just stop paying the mortgage. Some even abandon the home. As a result, after a protracted procedure, the lender forecloses on the home and takes over possession. In theory, the last part of this procedure is to auction the home to the highest bidder but this rarely happens at the moment. Instead, the lender takes title to the home and sells it as a REO or "Bank Owned" property. Note that people who allow their homes to be foreclosed, have little incentive to maintain a home or leave it in good condition. Stories abound of home owners who have virtually destroyed their homes just before the final stages of the foreclosure process.
Bank Owned Properties
Once the bank or lender re-possesses a home, they generally have it brought back to an "acceptable" condition - with maybe paint or carpet, certainly little more - and then list it for sale. As banks hate to own properties these homes are a big liability for them and are some of the best buys in real estate today, provided that the buyer is prepared to accept that they are generally in need of updating or improving. I have access to all of the Bank Owned / REOs on the market in Tampa Bay area and Pinellas County and if you are serious about wanting to buy such a property, I can help you find one.
Please note that you will need to have a substantial down payment to buy one of these homes - at least 10%-20% of Purchase Price. You also need to have a good FICO score. I do work with several good local lenders to walk you throught the process.
There is a lot more to know about all of these situations than is detailed above. I do have the answers you need and I can represent you in the purchase of such homes. Just call me on my cell at (727) 204-5001 to discuss the way to move forward.
Please complete the form below and I will get back to you as quickly as possible.
Best,
Keyvan Kohan
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