Need opinions

[clarkm]

I've been reading SB for about a year now. I just got a phone call from my landlord letting me know that they are short-selling some of the units in my building. Long story short the builder couldn't sell all of the condo's in this building he had remodeled and rented them out for a great deal. Now he is foreclosing and I may have to move. I don't want to move, I like the building, and the neighbors which brings me to the thought of trying to work out a deal. What do you know about short sales and negotiating with the banks? I don't have alot of money to put down but I'm expecting a sizable bonus in March. So my plan was to pay debts down to improve my credit and use the rest for a 5% down on an FHA mortgage. This situation has me in a pickle and maybe wanting to make a decision based on whats convienient not what is finacially smart. What would your opinion be and can you recommend a good FHA mortgage broker that I could talk with about my situation?

[sniglet]

If you really like the place, and you feel there is a purchase price that would fit very comfortably into your budget, then by all means go ahead and negotiate a short-sale with the bank. However, make ABSOLUTELY sure that a 50% decline in value from the price you buy it at wouldn't cause any undue trouble to your financial or mental well-being.

There is a VERY good chance that real-estate prices are going to drop significantly more from where they are now, so people should only be buying today with the understanding that there is a tremendous chance they prices can still suffer additional massive price drops.

But as many people have pointed out on these message boards before, purchase decisions shouldn't be made due to economic reasons. There is a lot of emotional value in owning your own home that go beyond the economics. Plenty of people really enjoy buying new cars even though they lose 20% (or more) of their value the minute they drive them off the dealer lot. Accepting that depreciation is a SMALL price when the potential enjoyment is so large.

Just don't kid yourself into thinking the drop in value might be small, or non-existant.

[Charles Dean]

You'll need at least 5% down for sure. FHA may not be an option for you, depending on if it was a conversion, new construction and how many have actually sold.

If you really like the place and don't see yourself moving for at least 5 years, I'd say go for it as long as it's a reasonable price. The way the current market is, I always suggest that people not buy unless they plan on living there for 5 years minimum.

[sniglet]

[mukoh]

Find out who is good at the banks REO department and processing. You can do research in a few more private investor forums for that or just start cold calling their dept.

Ask them to sell you your unit at ratios that are acceptible to you, with financing from them. I have seen banks offer builder products to owners and investors (bulk buyers) at 2% 7yr baloons, without negam. Negotiate yourself the best deal that you feel comfortable with for a long term. If it doesn't work, walk away.

Savvy people usually plan for their debt to income ratio to be not 50% such as banks like but 35%. Also allow yourself to add extra principal to every months mortgage payment. Thats IMO.