What's the difference between a short sale and foreclosure - what's the best option for me?
Recently, I talked with Tom Friehe of Zoom Marketing Associates, a specialist in short sales. As a result of our discussion, we decided we wanted to outline several options for you if you’re facing foreclosure or the prospect of it.
With options, you have choices, and choices give you power over your financial situation!
Naturally, we think short sales are one good solution to a pre-foreclosure situation. However, we want you to be fully informed so you can make the best choice for your specific situation!
To that end, we’ve provided all the basic information you need below. Read on and arm yourself with some very useful guidelines!
What Is a Short Sale?
Simply put, a short sale can occur when the debt on a home is greater than the amount for which the property can be sold. Here’s a basic example:
Assume a homeowner has an unpaid loan balance of $150,000, but the property will sell for only $125,000. The lender agrees to sell the house for the $125,000 amount, which, of course, leaves it “short” of the full amount. Thus, the name “short sale!”
How Do You Qualify for a Short Sale?
In order to qualify for a short sale, you need to prove some kind of hardship. That hardship can include…medical emergencies, divorce, loss of a job, financial hardship, long-term military call-ups, etc.
So, as you can see, many good, hard working, bill-paying people can qualify for a short sale under the right circumstances.
Why Would I Want to Do a Short Sale Rather than a Foreclosure?
A short sale has several advantages over a foreclosure.
First of all, the effects on your credit score can be much less with a short sale. Yes, your credit score will take a hit (a drop of 100-200 pts.), and you won’t be able to get a loan for two to three years.
But, a foreclosure has much deeper effects! Your credit score will also drop (200-300 points), but the damage will last longer – 3-5 years – and affect a broader range of credit-related items – car loans, home ownership loans, etc. In other words, you’ll have a harder time getting credit, and you’ll definitely pay more for it!
Second, short sales are private affairs compared to foreclosures. You’ll have the debt burden lifted off your shoulders without all your friends, family and neighbors knowing about it!
Third, think of short sales as being elective surgery rather than emergency surgery! With elective surgery, you know what’s going to happen and when it’s going to take place, so the stress and expense are much less!
Foreclosure is more like emergency surgery – costly and much, much harder on the emotional state of you and your family!
Finally, short sales are good for Omaha’s – and America’s economy. They don’t impact neighborhoods home values like foreclosures do, and that’s good for everyone involved!
If I’m Facing Foreclosure, What Are My Options?
There are several options you can pursue. The first option is to simply start making payments on the home again if at all possible. This can sometimes be done by getting a loan from family members or friends.
A second option is called “Deed in Lieu of Foreclosure.” This is a situation where you go to the bank and negotiate with them to take the deed in order to avoid foreclosure. However, this is a rare situation, and the deed may still show up on your credit report.
In a situation that’s temporary, a third option is to work out a payment plan with the lender or refinance the loan.
After that, a short sale is your best option.
What Are the Steps Involved in a Short Sale?
Although the steps are simple, I don’t have enough room in this message to explain them thoroughly for you.
That’s why I’d like the opportunity to do just that by asking you to go right now to support@midwestlossmitigation.com or call me immediately at 402.301.4500. I’ll help you understand your rights and responsibilities and show you that a short sale can be the best solution to a difficult situation.
Tom and I are here to rid you of foreclosure stress and set you free of the financial burden that’s weighing you down!
2 Dramatic FHA Mortgage Changes and the NEW Good Faith Estimate 2010
Expect Fun and Excitement On My Blog In The Coming Weeks!
You know I love mortgages, it's one of the biggest financial decisions you'll make in your life. However, I'm more concerned with your preparation for a mortgage so you're well qualified when it's time to buy. Plus, I want to make my videos fun, interesting, and exciting! In the coming weeks, I'll be inviting local business owners on my blog to help you make better financial decisions and live a financially responsible life so you can own the beautiful home of your dreams. Stay tuned - I'm very excited for what's to come.
Now, on to business....
We have some very important FHA mortgage changes in the late spring / early summer. They have decided to increase the upfront mortgage insurance premium from 1.75% to 2.25%, which means it's going to cost you or your client more to purchase or refinance a home.
The second big change, seller concessions, will reduce from 6% to 3% leaving the seller less flexibility to help you buy their home. What does that mean? It's time to buy the house you've been waiting to get a deal on - or you are going to pay more for your FHA mortgage if you wait.
How to Read the New Good Faith Estimate (Jan 2010)
Subscribe to:
Posts
(
Atom
)