| Learn How A Short Sale Can Help You Avoid Foreclosure | |
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Feeling like there is no other option but foreclosure can be an overwhelming experience. Know that you are not alone. Thousands of homeowners in the United States are facing the same challenges as you every single day. Now more than ever before there are solutions.
You need help, guidance, and someone who understands the difficult choices you are facing about your home, your family, and your life. Quite often a homeowner facing a foreclosure thinks they have to go through the process alone, forced into a daunting situation caused by unforeseen circumstances beyond their control. Facing damage to your credit, and the possibility of not being able to purchase another home for 10 years can be a tough future to face, but by tapping into the expertise of a knowledgeable real estate agent, there are options available for you and you've come to the right place.
We provide you with information about how to avoid a foreclosure, explain the effects it can have on you and your family, and offer other options that may be available to you. This includes a short sale, and we can help you determine if you qualify
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Please know that all communication will be strictly confidential.
| How to Stop the Foreclosure Process | |
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There are a myriad of ways that unforeseen hardships can change the joy of owning a home into an incredible burden. Maybe you've lost your job, or have unexpected medical bills beginning to pile up, or your monthly mortgage payments have increased beyond your current budget. No matter what the cause of your troubles, ignoring the problem won't help, it will only make it worse. You must act quickly to resolve the issue.
The following are a few examples of how to stop a foreclosure on your home:
1. Look for Other Sources - Most homeowners don't realize they have a variety of resources that can aid in making mortgage payments to avoid foreclosure. Consider the income created by unemployment or disability insurance and your savings as possible cash-flow resources. Other examples include slashing the household budget by trading in expensive items like cars, boats, and motorcycles for cash. Even retirement funds can be used, but beware that many people with access to their retirement funds can be penalized for early withdraw and face increased income taxes.
2. Contact Your Lender - If you have reviewed all possibilities of creating cash-flow to pay your mortgage, then it's time to reach out to your lender. Do this as soon as possible! Your ultimate goal in contacting your lender is to create an agreement that will alter your mortgage so that foreclosure proceedings can be stopped before they are finalized.
3. Review the Options - After contacting your lender, or in some cases the servicing company that handles the loan for an investor, you may have other options available. Typically lenders are not required to make adjustments to your loan, but many will consider it a viable option--one that benefits the lender and you and can include refinancing.
Possible options to discuss with your lender include:
| Effects of Foreclosure | |
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These days more homeowners are facing a tough decision about whether foreclosing is the only option they have left. Deciding to foreclose on your home will have implications on your family and your credit for the rest of your life.
When a homeowner can no longer make payments to a lender for a home, the lender may repossess a home in the process of foreclosure, usually with the purpose of reselling it, to recover the amount owed on the defaulted home. Homeowners facing foreclosure proceedings will face lasting implications.
A few of the effects of foreclosure are:
1) Your credit scores will be significantly lowered, sometimes by more than 300 points. This is the single most devastating mark on your credit report and will affect all of your future credit possibilities.
2) A foreclosure listed on a credit report is nearly impossible to have repaired and will most likely remain a permanent mark on this valuable personal report.
3) Any future application for a mortgage you apply for will require you to reveal a previous foreclosure, greatly affecting your mortgage rates.
4) Most employers will also conduct a credit check. With a huge drop in your credit score due to a foreclosure, this may also hinder your future employment opportunities. This is especially true of many government positions, including military and law enforcement agencies.
5) If your current employer runs a credit check, then a foreclosure may even put your current position in jeopardy.
6) In order to recuperate money they did not receive during a bank sale of the property, a lender may seek a deficiency judgment against you to obtain the balance.
7) Depending on your state law, you may be responsible for deficiencies after the foreclosure for an undetermined time period, placing you in a prolonged cycle of continued collections.
8) Your family will have to relocate. This is always a disturbance for children, marriages, careers, and other important aspects of your life.
| What is a Short Sale? | |
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Foreclosure on a home has consequences for the family, the community, the housing market, and the economy. However, the option for a short sale provides a way for troubled homeowners to prevent foreclosure and many of the dire penalties involved. A short sale is an agreement in which your mortgage lender agrees to accept a payoff on the loan for less than the balance. Many lenders agree to a short sale because they receive more of the loan balance in comparison to the amount they would gain from selling the property following a foreclosure. This process also aids in maintaining home values in the community the property is located and helps the homeowner maintain a better level of credit compared to a foreclosure. In most instances, homeowners considering a short sale must meet specific criteria to qualify: you must be behind in your mortgage payments, provide evidence of economic hardship, and have little or no equity in the property.
A short sale is not a typical real estate transaction. Most real estate transactions involve the home seller and their real estate agent, the buyer and their lender, and their real estate agent. In a short sale situation, all of those parties in addition to the seller's loan servicer, a housing counselor, any junior lien holders, mortgage investors, and insurers may be involved too.
With so many parties involved in a short sale, the process can be difficult to complete without a qualified REALTOR® to help guide you and act as a liaison between all of the parties involved. You will want the advice and expertise of a REALTOR® who has your best interests in mind and will expedite the short sale transaction. It is essential to have a REALTOR® who won't allow you to miss a detail that could delay closing the transaction in a timely manner and to the specifics required by all parties involved. A qualified REALTOR® with experience in short sales will also be able to find a buyer to complete the transaction. Homeowners agreeing to a short sale should also consult a tax expert and obtain the services of an attorney to help protect themselves from any future claims by the lender.
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| Short Sale Vs. Foreclosure | |
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- What are the implications to my credit score?
Following a successful short sale your mortgage will be reported on your credit score as either paid or negotiated, lowering your score as little as 50 points and affecting you for only 12 to 18 months. After a foreclosure, however, your credit score can lower as much as 300 and usually at a minimum of 250 points and affects your score for over three years.
- What are the implications to my credit history?
A short sale is usually reported as paid in full and is not reported on your credit history. A foreclosure will remain on your credit history for 10 years or more and will remain as public record.
- Who decides if my home should undergo a foreclosure or a short sale?
In both short sales and foreclosure, the decision is made by your mortgage lender. The most important aspects to getting a lender to agree to a short sale, and saving you the more damaging credit implications of a foreclosure, is to prove that you have no other way to pay the mortgage and that the amount received from a short sale is the fair price of the market. Lenders who believe they can receive more by taking possession of the home in a foreclosure and selling it themselves will not agree to a short sale.
- How long will I have to wait to buy another home?
After a foreclosure, you may end up waiting another 24 to 72 months before a mortgage lender will offer you an interest rate that is acceptable. Most mortgage lenders report that for homeowners who have undergone a previous short sale they may get a reasonable interest rate in less than two years. Fannie Mae guidelines allow a short seller to apply for a new loan immediately if payments were kept current and had no 60-day late payments on their record.
- What will be the effects on my future loans?
For most mortgage lenders you will not be asked to declare or be questioned regarding a short sale on any standard loan application (1003). In regards to foreclosure, you will be asked on any future standard loan application (1003) if you have had a property foreclosed in the last seven years, therefore affecting your rate. Fannie Mae backed mortgages will be available to you following a short sale after two years. Fannie Mae backed mortgages will not be available to you for at least five years if you have lost your home due to a foreclosure.
- Does it affect my employment opportunites?
A short sale does not appear on a credit report and will not challenge your current employment status. In comparison, if you have a foreclosure on your credit report, some employers consider it a reason for termination or reassignment since many run credit checks on employees for certain positions. A foreclosure can be extremely harmful to your chance of being selected for a new job if your credit report is taken into consideration.
- How does a short sale versus a foreclosure affect the deficiency judgment?
If your short sale is handled successfully, the lender may give up the right to pursue a deficiency judgment against you. If the lender does pursue a deficiency judgment against you after a successful short sale, the amount will be considerably lower because your home was sold at a price closer to market value than that of an REO (Real Estate-Owned) sale. In all foreclosures, with the exception of those states without deficiency, the bank has the right to file a deficiency judgment against you. Since your foreclosed home will have to go through the REO process if not sold at auction for a lower sales price, this results in a higher deficiency judgment against you.
Specializing in helping homeowners use a Short Sale
to avoid home foreclosure in the WIlson and Davidson County Real Estate market.
