Buying A Short Sale Home As Your First Home

Many people who are buying a home for the first time report that they are both nervous and excited at the same time. This is normal because there are mixed feelings of nervousness and excitement all rolled into the same experience. This can be especially true when you are buying a short sale and you are faced with waiting for months for the mortgage lender to make a decision about accepting your offier.

A First Step To Take: Get Pre-Approved

A great starting point for buying your first home, is to get your hands on a copy of your credit report to learn your credit score. Be sure that your credit report does not have any incorrect information on it. If your credit report does contain errors, you will want to get the information corrected before trying to get your mortgage approved – this is especially true if the mistakes have to do with late payments or collection accounts.

Here are the things that you will need to get pre-qualified or pre-approved:

  • Gather your financial information – 30 days of pay stubs, 2 months of bank statements, last quarterly IRA and 401K statements, last year’s W2′s. You will want to provide this information to your loan officer once you select one as part of the loan application and approval process.
  • Research Loan Programs, FHA Mortgages, First Time Home Buyer Programs
  • Find a Mortgage Company or Lender to work with – check with your real estate agent for some referrals to good lenders – all agents know someone.
  • With your lender, determine the price range of homes that you qualify for.
  • Decide how much you think you can spend each month on a monthly payment.

Real Estate Agents Help You Shop

When you begin your home search for a short sale home, you will want to work with an experienced real estate agent who has handled homes that have gone through the short sale process. Our agents have experience in handling short sales.

Most people start their home search by searching on price range or location as well as what features you want in a home. The agent should set you up on some sort of automated email system that will send you new listings every day. Start your short sale home search.

Once you begin working with your Realtor to visit some houses you will want to take notes about each home you visit. Take a camera so you can take pictures to remember each home. Trust us on this; you won’t remember the specifics otherwise, once you have visited more than about 5 homes.

Once you find the house that you like, it is time to write up a sales contract with your agent. The sales contract approval process on a short sale home can take several months which can be nerve wracking. This is the time you need to be patient.

On a short sale offer, the lender is going to evaluate what sales price they can “afford.” Short sales transactions are about the lender taking a loss on the amount of money that is owed by the home owner versus the sales price that you offer. The lender will decide whether they can sell the home, or whether it is in their best interest to foreclose on the home and resell it later. View more questions about the short sale process.

Once your offer is accepted, your agent can help you make sure that appropriate inspections are scheduled and completed.

From here, if your offer is accepted, you should have relatively smooth sailing if you had already provided your lender with your loan application information like your pay stubs and bank statements etc.