Debra Mitchell-Adams

1. Do not assume you cannot buy a home just because you have credit challenges. Even if you are not ready now a good lender (who will be in it with you for the long run) will review your credit file and advise you of what to work on in order to qualify for a home in the future. In most cases it will just take a bit of time and patience to address credit challenges and qualify for your new home.

2. Go to a reputable lender and ask to get pre-qualified to buy a home. A great place to start would be a direct lender (a lender that lends it’s own money, not a broker who will shop around for direct lenders). The trend now is for Realtors to REQUIRE that a pre-approval from a direct lender accompany a buyer’s offer, so you will be ahead of the game if you start with a direct lender.

3. NEVER, EVER pay someone who promises to “fix” your credit overnight! No one can fix credit overnight no matter what they promise you. Even in the case where companies manage to get things removed from your credit in most cases after they’ve taken your money the item with reappear on your credit months later. Your money will be better spent purchasing one of the many very good self-help books on credit one of which I penned entitled, “Girlfriend, Fix Your Credit,” which is a very inexpensive self-help book that provides a step-by-step guide to improving credit and/or working one-on-one with a lender to improve your credit file.

4. Resist the urge to pay off old debts and credit cards without first speaking with your lender. When I bought my first house I spent $7,500 paying off old debt (against the advice of my lender) and it did not improve my credit score by even 1 point! I’m not advocating not paying off your debts. I actually felt very good paying off those old college debts, but if you are doing it just to improve your credit score make sure you know how paying old debt will effect your overall credit rating once the debt is released.

5. Don’t buy any big ticket items until your home purchase is complete. Do not go out and buy a car, boat, train, plane or anything other big ticket items if you are purchasing a home with financing. Lender’s look at your debt to income ratio (how much money you make vs. how much you spend every month). If you tip the scales by incurring a big debt during the process this could seriously hurt your chances of qualifying to purchase a home.

6. Avoid last minute large deposits into your bank accounts. They are a huge red flag for lenders, who have strict guidelines about where the money for your home purchase can come from. Lenders require that every penny in your bank accounts be sourced and verified.

7. Do not listen to your friends (unless they are full-time real estate professionals and/or lenders). Friends mean well, but lending guidelines and real estate related programs change daily, so it’s better to consult with a real estate professional for advice about buying, selling and financing real estate.

8. Try not to hire an agent just because they are a ”friend of a friend” and have a real estate license. Interview at least three Realtors and research their credentials and make sure they have experience with working with first time buyers.

9. Save, save, save! The financial commitment is more than just the down payment. There are a lot of expenses when purchasing a new home such as home inspections, appraisals and deposits, and things that you don’t have to buy when renting like (window coverings, lawn care items and appliances).

10. If you are purchase a home with someone else, (a spouse, roommate, family member or significant other) make sure you communicate with each other about what features are important for your new home. I have seen so many people become at odds during the home buying process because they have not previously discussed what is important for them to have in a home.

For more information about buying your first home consult your local Keller Williams office or if you are purchasing in Southern California contact me.

The HAFA program (Home Affordable Foreclosure Alternatives) is a government-sponsored program that allows homeowners who are short selling their properties to receive $3000 in relocation assistance, have their total mortgage debt forgiven and requires that participating lenders waive all future claims against homeowners.

For a successful HAFA short sale it™s best to hire a Realtor who has experience with short salesand who is a Certified HAFA Specialist. To find a Certified HAFA Specialist in your area click here.

Once you locate your Realtor you should discuss the HAFA program and the eligibility guidelines at your listing appointment. The HAFA program requires that the Realtor submit the homeowner™s paperwork in a very specific and time-sensitive manner, so if you would like to be considered for the program it™s important to determine your eligibility with your Realtor at your listing appointment.

To be œeligible for the HAFA program the borrower must¦

· Live in the property and it must be the borrower™s primary residence, (not an investment property).

· Have a mortgage loan that is a first lien mortgage and was originated on or before January 1, 2009.

· Be delinquent on the mortgage or default is reasonably foreseeable;

· The current unpaid principal balance is equal to or less than $729,750 for one single family home.

It™s also important to understand that œeligibility does not mean that you will be approved for the HAFA program. It simply means that you are eligible to be considered. Each file is reviewed individually based on lender and investor guidelines.

Not all lenders participate in HAFA. If your lender (your 1^st lien holder) does not participate in HAFA you cannot be considered for the program. However, you can complete a regular short sale. YourRealtor can negotiate to have future claims waived, but in a regular short sale the borrower is not allowed to receive any money from the sale of the property. For a list of participating HAFA lendersclick here.

Participating lenders are also required to consider all eligible homeowners for HAFA before the homeowner™s loan is referred for foreclosure or before a pending foreclosure sale is completed.

This applies to homeowners who meet the following criteria:

· The homeowner did not qualify for a HAMP Trial Period Plan. (The HAMP program is another government-sponsored program that is designed to modify the mortgages of distressed homeowners. The trial period is a 3-month period where the homeowner makes good faith payments (most of the time a reduced payment) before the modification can be made permanent).

· The homeowner failed to successfully complete HAMP Trial Period Plan.

· The homeowner requests a short sale or deed-in-lieu. (A deed-in-lieu of foreclosure is when the homeowner gives the deed back to the lender to satisfy the debt on the property and avoid foreclosure).

The HAFA program is not perfect and there are possible hiccups that a homeowner may face when attempting a HAFA short sale. However, if you hire a Realtor that is experienced with short sales and with HAFA your chances are far better than most of walking away with not only $3000 in relocation assistance, but a fresh start!

1. Hire a short sale specialist. Not all Realtors are experienced in short sales. Depending on what kind of short sale you are requesting (the Federal government has a program called, œHAFA, which among other things gives the homeowner $3000 in relocation assistance) or a regular short sale, your Realtor MUST be well versed in the qualifications and guidelines that your bank requires for a short sale approval. Hiring a Realtor that is well informed about the changes in the various short sale programs will be the difference between an approval or a denial.

2. Have all your ducks in a row at the listing appointment. The top reason that many short sales are denied is incomplete documentation from the homeowner. A short sale specialist will give you a list of documents you will need prior to your listing appointment. Make sure you provide your Realtor with all of the requested documentation at the listing appointment. Banks will not review your short sale request for approval unless all documents are received and scanned into their systems. Many banks loose documents during the process and that too has led to denials. If you submit a complete package upon first submission you better your chances for a timely review of your file and a subsequent approval.

3. Give all details about liens on property. Make sure you tell your Realtor if there is a line of credit or a second or third lien on your property. Your Realtor is going to have to negotiate with EVERY lien holder on the property in order to convey clear title (a title free of any liens or encumbrances) to a prospective buyer. You will not have a successful short sale unless all previous liens are released!

4. Provide additional documentation in a timely manner. Many times during the short sale process the bank will require additional documentation (such as updated pay stubs and bank statements). Because the short sale process can take up to 90 days these documents will need to be updated every 30 days. Make sure to provide your Realtor with updated documentation in a timely manner. It will help to move the process along faster and help you move on with your life!

5. Don™t move during the short sale process! Many lenders require that the homeowner occupy the property as their primary residence until the short sale is completed. DO NOT MOVE until the sale of your property is completed.