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Many people in the market today are first-time home buyers who would not have been able to buy when home prices were higher. Enticed both by lower prices and bank promotions, these eager hopefuls are have taken the signs of deals as the best chance to make their first real estate move .

While all home buyers need help with the short sale process, it’s especially challenging to address the needs and concerns of a first-time home buyer who has decided a short sale is the home for them. Here’s how to get answers to first-time home buyers’ top three questions about short sales.

1. How long does it take for a bank to approve a short sale?

This is the million-dollar question. While it takes an average of three to six months, the timeline – and the process – vary quite a bit from one bank to another.

Short sale approval timelines depend on the bank (some just take longer than others). While each bank has different short sale guidelines, the short sale has to make sense to the bank. The more sense the short sale offer makes to the bank, the faster the approval process.

Here are some things that slow down the process by several weeks or more – these usually involve more people or more factors:

• Multiple liens on the property
• A third party negotiating the short sale on behalf of a seller. Some states allow third parties to do this, for a fee; some states, like Virginia, limit this to real estate licensees, attorneys, and employees of attorneys.
• Private Mortgage Insurance (PMI) on the property
• Additional investors

Action: To make an accurate prediction about the short sale timeline for a particular property, research the bank’s general timelines, the property’s liens, and whether there is PMI before writing the offer.

2. Will the bank make repairs to the property?

The short answer is, probably not.

Here’s why:

• The bank does not have possession of the property and has no authority to make repairs on behalf of the seller.
• Many short-sale sellers do not have the financial means to make repairs.
• Many banks require the short sale to be sold strictly “as-is” and do not allow the seller to pay for any repairs.

Why wouldn’t a bank allow the seller to make repairs? your buyer may ask. A short sale is a sticky situation for a bank, and that the bank wants to avoid potential liability. For example, if the bank allowed the seller to make repairs and the repairs proved to be faulty, the buyer might potentially hold the bank liable, since the seller doesn’t have money (which is how the short-sale situation came about in the first place).

Action: Find out how the bank and the seller feel about making possible repairs. A short-sale buyer needs to understand that the home will most likely be sold strictly “as-is” and all repairs will be at their expense.

3. How do other types of debt affect the short sale outcome?

Many short-sale sellers are more than just “house-poor.” Many have additional debts that place a cloud on title. These include tax liens – income and property, medical liens, mechanic’s liens, and child support judgments.

Depending on your state, some creditors can try to collect debt by going to civil court and getting a judgment lien placed on the property against the homeowner. These liens must be cleared before the short sale transaction can be closed.

• Surprisingly, tax liens are probably the easiest to clear off the title. The IRS has several avenues to collect back taxes, and doesn’t want to become a real estate holding company. Removing a tax lien can take up to 120 days, so it is imperative that this process is started well in advance of the short sale.
• Medical liens can usually be negotiated and a payment plan worked out. However, this is a time-consuming process and needs to be started as soon as possible.
• Mechanic’s liens are a little harder to get removed. There is not much recourse for tradespeople and bad debts.
• Child support judgments are also difficult to remove because they usually involve government agencies.

In short, additional debts can tie up the short sale process.

Action: Make sure to ask the listing agent if a preliminary title search has been performed on the property so you can advise your buyer about possible obstacles.

The more information you can offer your first-time home buyer, the more confident they can be about the transaction. The more confident they are about the transaction, the more likely they will see the transaction through to the closing table.

Rates Don’t Rise in a Straight Line. Here’s What to Say

With rates improving at the end of last week, many people who are on the fence may be confused into thinking rates are going to get better again. In reality, the rally we saw at the end of last week presents an opportunity for people to purchase or refinance before rates likely continue on their trend for the worse. To help explain the situation and get homebuyers off the fence, discuss the following talking points:

• Bonds were able to rally last week to help rates improve from where they were earlier in the week.
• That presented a great opportunity, but the overall direction of rates shows them on a worsening trend.
• What last week actually demonstrates is that rates don’t just move in a straight line. Instead, there are dips here and there like we saw last week when rates show a modest, but temporary improvement.
• Those short-livid improvements provide fleeting opportunities to lock in on some of the best rates ever seen, before the trend continues and rates worsen more.
• At the end of the day, the ongoing and potential addition of further stimulus from the Fed, combined with the stimulus from the tax cuts, will make it tough for Bonds and home loan rates to return to the levels seen earlier this year.

With very little economic news during the short holiday week, mortgage rates remained at the lowest levels in decades. While mortgage rates ended the week slightly lower, the level of volatility in mortgage markets and other financial markets was relatively high. Even without major news, sudden movements in rates were common during the week. The stock market displayed similar price swings, as the Dow recovered the roughly 400 points it lost the prior week. This volatility in financial markets reflects the high level of investor uncertainty about the pace of global economic growth.

The current low mortgage rates can be attributed to a couple of factors. One is that inflation is under control and is expected to remain low for quite a while. Another is that demand for mortgage-backed securities (MBS) is high. When packaged and sold as government guaranteed MBS, mortgages are viewed as safe investments, much like US Treasury securities, and safety has been important to investors in these uncertain times. With financial regulatory reform behind them, Congress is now beginning to consider the appropriate role for the government in the housing market. Central issues include government guarantees for mortgages and the future of Fannie Mae and Freddie Mac. The debate is expected to be long and difficult, with no easy answers.

After dropping to the lowest level in decades last week, mortgage rates fell even further this week. Weak economic data from the US, Europe, and China caused investors to question the pace of the global economic recovery. Slower economic growth was positive for mortgage rates and negative for the stock market.

Friday's important Employment report reflected a slowly improving labor market. The economy lost -125K jobs in June, which was very close to expectations. The figures include a loss of -225K census workers who completed their temporary assignments. The private sector added 83K jobs. The Unemployment Rate fell to 9.5% from 9.7% in May, but this was due to 650K people leaving the labor force. The labor force consists of everyone in the US who either has a job or is looking for one, and the Unemployment Rate measures the percentage of the labor force without jobs.

There was mixed news in the housing sector this week. May Pending Home Sales declined 30% from April, as many buyers rushed to sign contracts ahead of the April 30 deadline to qualify for the home buyer tax credit. On a more positive note, the "close-by" deadline for the home buyer tax credit has been extended to September 30. Although the tax credit is not available for new contracts signed after April 30, extremely low mortgage rates and high home affordability levels make conditions very favorable for home purchases.

Mortgage rates dropped to the lowest level in decades this week, and home affordability is very favorable. Uncertainty about the extent of global economic growth and continued low inflation levels have helped mortgage rates reach these levels.

After months of debate, Congress reached agreement on the Financial Reform bill, and it is expected to pass next week. The bill includes many provisions which will affect mortgage lending and the home buying process, but the impact will not be fully known for some time as many of its changes are subject to regulatory discretion. Separately, the larger bill containing an extension to the home buyer tax credit "close-by" deadline failed to pass this week. Lawmakers will continue to debate the bill, but it appears unlikely that the "close-by" deadline will be changed before the current June 30 deadline is reached.

The performance difference in this week's two housing reports was stark, but it was mostly due to measurement methods. May Existing Home Sales fell 2% from April, and were up 19% from one year ago. May New Home Sales dropped 33% from April, which was about 13% lower than one year ago, and a record low level. There's an important difference between the two reports, though. Existing Home Sales measure transaction closings, while New Home Sales are based on contract signings. The April 30 contract signing deadline to receive the home buyer tax credit pulled many contract signings forward into April, and some of these deals closed in May. As a result, Existing Home Sales were still boosted by the tax credit in May, while New Home Sales were not.

For most people, tax and investment benefits make home ownership an attractive option compared to renting.

Financial incentives vary, but many buyers are motivated by three major benefits:

1. Income tax reduction. In most cases, mortgage interest and property taxes reduce both taxable income and overall tax bills. Also, if you sell your home at a profit, it's likely that much or all of your gain will be tax-free under federal tax rules approved in 1997.
2. Wealth-building possibilities. A home is not only shelter; it's also an investment. While there's no guarantee that real estate prices will rise, a home is the single largest asset that most people hold.
3. Tax-deductible borrowing power. As your home equity increases, you can borrow against it for any need with a home equity loan or line of credit. Because your loan or line of credit is backed by the equity in your home, you may be able to subtract the interest from your taxable income - which could lower your final tax bill.

The benefits and overall financial incentives grow the longer you stay in your home. If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

Global economic news was the primary influence on US mortgage markets this week. While the US data released during the week was mixed, an improved economic outlook in many other countries was unfavorable for bond markets. As a result, mortgage rates ended the week a little higher.

In recent weeks, mortgage rates have fallen to the lowest levels in decades. This has occurred, in part, due to the economic troubles in Europe, which reduced the willingness of investors to hold risky assets such as stocks. During periods of uncertainty, it's common for investors to seek a higher level of relatively safer assets, including US mortgage-backed securities (MBS). On Thursday, however, a series of global headlines from Europe, Asia, and Australia contained positive news for economic growth, which caused investors to move back toward riskier assets and out of bonds. The stock market rallied, and mortgage rates moved higher.

On Thursday, lawmakers introduced a proposal which, if passed, will extend the "close-by" deadline to receive the homebuyer tax credit from June 30 to September 30. The legislation doesn't affect who may qualify for the tax credit. To qualify, you still must have signed a contract by April 30, but it will relieve some of the pressure to close by June 30. Buyers who had not expected to close by June 30 may now be able to qualify.