The Short Sale: Don’t Rule it out until you understand it!
Do you feel like you’re drowning? Like many good folks now a day, you might be upside down on your mortgage….
Maybe you have missed a payment or two….or more! Late fees and back interest are rising fast, your lender is calling, your back accounts and credit cards are exhausted, your nerves are tattered and you’re thinking only one thing…FORECLOSURE.
But did you know that foreclosure CAN be avoided – though viable options!
Not all is lost.
Team 292-SOLD can walk you through 10 alternatives to foreclosure, including eight ways you can remain in your home. We can also alert you to three foreclosure scams to watch out for. Just call or email us and ask for our Foreclosure Alternatives Report.
It’s called…the Short Sale.
Here’s the bottom line: most lenders love the short sale concept.
Over the past several months, short sales have helped thousands of American homeowners escape from the tough spot you now occupy. And, unlike falling into foreclosure, a short sale keeps you eligible to buy another home – very soon – if that’s your goal.
Short sales also allow families to relocate on a more humane schedule versus the hasty (even degrading) moves that can follow a foreclosure.
And best of all, a Short Sale can erase that massive mortgage debt!!!
Just what is a Short Sale? Let’s put it in quick numbers…
Say you are facing foreclosure with an existing mortgage of $400,000, but the current market won’t pay $400,000 for your home. A buyer writes you a $250,000 offer. The Short Sale (the difference) is $150,000. The lender gets the proceeds and discharges your remaining debt. Done.
How long will it take you to go from the brink of foreclosure to a zero mortgage balance? Five steps. And here’s the road map:
STEP 1: Calculate the current value of your home. A real estate agent can do that. If you don’t have one, check websites like Cyberhomes.com for an instant price estimate of your home and for comparable homes prices near you.
STEP 2: Tally up the expenses of selling. Once more, this is much easier with the help of a real estate expert. But if is without one, call a title company and ask the closing costs associated with your property. They may include: title and escrow fees, attorney fees, any unpaid property taxes, notary fees, re-conveyance fee, delivery, transfer and documentary fees. Don’t forget to include your monthly interest, which accrues until the sale is final.
STEP 3: Check your mortgage statements to see what you owe against the property. After you’ve done the math, you’ll have a “ball park” figure for the Short Sale.
STEP 4: Call your lender. Start with customer service and ask for a supervisor – or a “foreclosure prevention department” if they have one. A real estate agent can negotiate on your behalf and gather the documentation a lender requires. But if you are going at it alone, you should know the two keys to convince your lender that a Short Sale is the best option:
A. Establish that you have no other financial means to pay your mortgage.
B. Validate that a fair market price is lower that what you owe against the house.
You will have the lender’s attention. They want to avoid foreclosure too because they face a larger loss if you default. Still, most lenders have specific criteria for approving Short Sales – and those have to so with your ability to repay the existing debt.
So…Ask your lender to give you their rules and procedures for a Short Sale. Some lenders are even willing to reduce the balance owed on the loan. But be aware: There are lenders who will reject a Short Sale and say your debt is your responsibility.
STEP 5: Find a buyer and make the deal. If possible, allow 90 days to complete a lender-approved Short Sale. Take note: There are lenders that require the buyer to pay the difference between the sales price and the amount still owed on the mortgage.
Once the process is finished, your mortgage debt disappears.
BUT…The IRS often treats that as income so remember this during tax time.
As you pack your boxes, have peace of mind that in choosing to Short Sale, your credit rating is still largely intact. Whereas, a foreclosure can shed 250 points or more from your credit score – and cause you to wait 3 years to land a reasonable mortgage rate (A Short Sale will only reduce your score by 100 points or fewer). And you probably will only have to wait 18 months or so to qualify once again for a decent mortgage rate. Now THAT is a great alternative!!!
The Short Sale process is a lot less stressful if you have a real estate professional, who is familiar with the Short Sale process, on your side. If you need your real estate problems solved, or simply have questions and need advice regarding the process, give us a call and we would love to chat with you!
“Stop Dreaming – Start Moving”®
925-292-SOLD (7653)
