Avoid Foreclosure by Doing a Short Sale
December 24th, 2007 // 7:13 am @ admin
Pamela Dombrowski-Wilson asked:
Many homeowners are finding themselves upside-down, meaning that they owe more on their home than the current market value. What factors have resulted in many owners finding themselves in this position?
For some, simple hardship results in being upside-down. Perhaps one our both spouses have lost their job or have had to take another position at a lower income. Perhaps due to an adjustable rate mortgage the monthly payment has increased to an amount that is difficult for the owner to pay. Other reasons include interest only mortgages where payments are applied only to the interest and no payments are made to reduce the base cost of the loan.
Some older adults find themselves in a position of planning for long term care and simply needing to move while their mortgage balance is greater than the value of their home. For them, it is simply a matter of timing versus a personal need for care. There are as many reasons people find themselves in this situation as there are people in the world.
So, once a home owner is in a position where making monthly mortgage payments become difficult, what is the best course of action? The obvious is to address the hardship issue if possible. However if this is an unrealistic solution, a short sale can avoid the route to foreclosure and damaging a credit rating. The time to consider a short sale is long (at least 6-8 months) before a home owner approaches foreclosure and when a valid hardship can be documented.
An experienced realtor can guide you through the short sale process. This includes gathering information about the requirements of the loan holder relative to the sale. In a short sale the skill of the realtor in the negotiation process is extremely important as the goal is to market and sell the home at the best price possible in order to close the gap on the amount of the loan and the net proceeds from the sale. Because of the process there are many more details than in a regular real estate transaction.
For example, a home with a loan value of $145,000 that can sells for $140,000 would result in a net proceed of approximately $130,200 (the cost to sell a home averages 7% of the sales price). Thus the difference between the loan amount and the net proceed is $14,800. This amount can be addressed in three ways: 1) it is forgiven in total, 2) the seller is asked to sign a loan for the amount due or 3) the seller is issued a 1099 at which time a tax specialist should be consulted.
The benefit of a doing a short sale versus allowing a home to go into foreclosure is that a credit record is not affected provided mortgage payments are current. The seller also remains in control of the transaction. Which means that the owner can occupy the home until is it sold and has time to make plans for new living arrangements. Take control of your real estate needs today and avoid foreclosure by looking into doing a short sale.
Many homeowners are finding themselves upside-down, meaning that they owe more on their home than the current market value. What factors have resulted in many owners finding themselves in this position?
For some, simple hardship results in being upside-down. Perhaps one our both spouses have lost their job or have had to take another position at a lower income. Perhaps due to an adjustable rate mortgage the monthly payment has increased to an amount that is difficult for the owner to pay. Other reasons include interest only mortgages where payments are applied only to the interest and no payments are made to reduce the base cost of the loan.
Some older adults find themselves in a position of planning for long term care and simply needing to move while their mortgage balance is greater than the value of their home. For them, it is simply a matter of timing versus a personal need for care. There are as many reasons people find themselves in this situation as there are people in the world.
So, once a home owner is in a position where making monthly mortgage payments become difficult, what is the best course of action? The obvious is to address the hardship issue if possible. However if this is an unrealistic solution, a short sale can avoid the route to foreclosure and damaging a credit rating. The time to consider a short sale is long (at least 6-8 months) before a home owner approaches foreclosure and when a valid hardship can be documented.
An experienced realtor can guide you through the short sale process. This includes gathering information about the requirements of the loan holder relative to the sale. In a short sale the skill of the realtor in the negotiation process is extremely important as the goal is to market and sell the home at the best price possible in order to close the gap on the amount of the loan and the net proceeds from the sale. Because of the process there are many more details than in a regular real estate transaction.
For example, a home with a loan value of $145,000 that can sells for $140,000 would result in a net proceed of approximately $130,200 (the cost to sell a home averages 7% of the sales price). Thus the difference between the loan amount and the net proceed is $14,800. This amount can be addressed in three ways: 1) it is forgiven in total, 2) the seller is asked to sign a loan for the amount due or 3) the seller is issued a 1099 at which time a tax specialist should be consulted.
The benefit of a doing a short sale versus allowing a home to go into foreclosure is that a credit record is not affected provided mortgage payments are current. The seller also remains in control of the transaction. Which means that the owner can occupy the home until is it sold and has time to make plans for new living arrangements. Take control of your real estate needs today and avoid foreclosure by looking into doing a short sale.
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Category : Short Sale Questions
Stop Foreclosure With a Short Sale
November 12th, 2007 // 3:13 am @ admin
Caroline Telford asked:
If you are having problems with making your mortgage payments and you know that foreclosure is just around the corner, you will be glad to know there is another way out of the jam. It may not be a piece of cake, but it will keep a foreclosure off your credit report. The ideal short sale for homeowners is when you owe more on your mortgage than what your home is worth.
Foreclosures are on the rise all across America, inventory is high, sales are low, home prices are dropping, and there are fewer buyers. All of this contributes to the situation the housing market is in at this time, however, none of this is good news to the homeowner that is in trouble of losing his or her home. You may have seen the problem coming and put your home on the market, however, it is still sitting after months on the market. Your funds are dwindling and you are now behind in your mortgage payments and foreclosure is peaking around the corner. How can you avoid the inevitable?
The answer is with a short sale. A short sale occurs when the lending company that is holding the note on your mortgage agrees to take less than what is owed on your loan. Most lending companies will not accept a proposal for a short sale until a homeowner is behind 90 days in their mortgage payments and a notice of default has been filed. However, your lending company may differ. The best way to learn if you should work towards a short sale is by talking with a real estate agent in your area that understands all about short sales. Not every real estate agent is experienced in the process and may not be able to give you qualified answers or help.
Practically every lending company would rather have a short sale settlement than have to deal with a foreclosure. A foreclosure will cost them more money and they will lose more money than going through a short sale.
The good news for you, if you decide to go with a short sale, is that you will not have a foreclosure in your credit history. You will have a settlement, but in the majority of cases, you will be able to apply and receive a mortgage loan within 1 to 3 years, whereas a foreclosure it will be much harder for a longer period of time.
If you are on the downhill slide toward foreclosure, it would be in your best interest to talk with a real estate agent that has worked with short sales in the past and has a proven track record. If not, you just as well sit back and wait for the grim reaper to come and take your home and possessions.
If you are having problems with making your mortgage payments and you know that foreclosure is just around the corner, you will be glad to know there is another way out of the jam. It may not be a piece of cake, but it will keep a foreclosure off your credit report. The ideal short sale for homeowners is when you owe more on your mortgage than what your home is worth.
Foreclosures are on the rise all across America, inventory is high, sales are low, home prices are dropping, and there are fewer buyers. All of this contributes to the situation the housing market is in at this time, however, none of this is good news to the homeowner that is in trouble of losing his or her home. You may have seen the problem coming and put your home on the market, however, it is still sitting after months on the market. Your funds are dwindling and you are now behind in your mortgage payments and foreclosure is peaking around the corner. How can you avoid the inevitable?
The answer is with a short sale. A short sale occurs when the lending company that is holding the note on your mortgage agrees to take less than what is owed on your loan. Most lending companies will not accept a proposal for a short sale until a homeowner is behind 90 days in their mortgage payments and a notice of default has been filed. However, your lending company may differ. The best way to learn if you should work towards a short sale is by talking with a real estate agent in your area that understands all about short sales. Not every real estate agent is experienced in the process and may not be able to give you qualified answers or help.
Practically every lending company would rather have a short sale settlement than have to deal with a foreclosure. A foreclosure will cost them more money and they will lose more money than going through a short sale.
The good news for you, if you decide to go with a short sale, is that you will not have a foreclosure in your credit history. You will have a settlement, but in the majority of cases, you will be able to apply and receive a mortgage loan within 1 to 3 years, whereas a foreclosure it will be much harder for a longer period of time.
If you are on the downhill slide toward foreclosure, it would be in your best interest to talk with a real estate agent that has worked with short sales in the past and has a proven track record. If not, you just as well sit back and wait for the grim reaper to come and take your home and possessions.
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Category : Short Sale Questions