In these tough economic times, many homeowners are on the verge of losing their homes and ruining their credit and financial future for many years. The current reality (and this changes daily in the financial world!) is that there is one option that can make a bad situation just a little bit better.
That’s a Short Sale. A short sale happens before the foreclosure occurs. You stop making your payments and you put the house up for sale at a price that is reasonable for the current market. Let’s say you own $420,000 but similar houses are selling for $300,000. So you put it up for sale at $300,000 and get a buyer. You now ask the mortgage company/bank if they will take just $300,000 from this buyer. If the bank is agreeable, the home is sold to the buyer.
This accomplishes a lot for the parties involved. The mortgage company gets this “troubled asset” off their books – now! This saves them a lot of money in the long run and will likely get them more money for the home than if they allow it to go to foreclosure.
For the Seller, it keeps the ugly mark of foreclosure off their credit. A foreclosure will keep you from getting a home loan and buying a home for at least 4 years. It will remain on your credit report(s) for 10 years making it extremely difficult to obtain new credit at the best rates. A Short Sale is damaging for about 2 years when applying for a home loan and the long term effects are much, much less than foreclosure.
Most homeowners want to do the right thing. They do not want to be foreclosed on. A short sale may be the best option for this.
Forest Tardibuono is a CA DRE Broker with over 20 years experience in real estate and lending. Contact him at (707) 523-2099. See more details at www.sunpacmortgage.com
