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Buying a short sale: can you lock in a mortgage rate?

Posted by  on Jun 03, 2012
 

I want to purchase a short sale home and save some money. Is the mortgage process the same for short sale purchases as it is for normal purchases?

Short sale purchases

Short sales take longer than buying homes that have already been foreclosed. However, if you can stand all the hurrying-up-and-waiting, there are some advantages in short sales. The owners are selling in order to preserve their credit ratings and avoid foreclosure--therefore, the homes are usually well-kept. It's usually in foreclosure homes that you get the angry holes kicked into the walls or cement dumped in the septic systems. More importantly, short sale properties are transferred free and clear of any liens. That is often not the case with foreclosure homes--the same folks who don't care to make their mortgage payments are likely to let their property taxes, assessments, homeowner dues, etc. slide as well.

Short sale mortgages

Financing a short sale isn't that different from financing an ordinary home purchase. Sometimes, the lender to be paid off insists on prequalifying or preapproving you for a mortgage before accepting your offer. This is because the lender wants to know that you can complete the purchase.

While you may have to provide your financial information to this lender, you don't have to use that company for your mortgage unless you want to. And the only reason you'd want to is that it offers you lower costs, better terms or (if you need it) easier loan approval. Before committing to using this lender for your new home loan, shop for the best mortgage rates and choose the lender with good deals and excellent service. (Short sales can be a hassle, and an experienced loan agent may be the only thing standing between you and insanity!)

Understand, however, that you probably won't be able to lock in current mortgage rates because the process takes so long that a rate lock would expire before you could close on your new home.



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