Virginia Property Finders LLC

WHY NOT BE FORECLOSED? WHY SHORT SALE?

Agents who have closed hundreds of these transactions provide this list of reasons

• Foreclosure Follows You – Homeowners will always have to disclose that they have had a foreclosure on any mortgage application and (many job applications) that they submit in the future. This can have an adverse affect on their future mortgage rates. Foreclosure is asked about specifically in credit inquiries. There is no seven-year time limit on this item.
• Credit Score Negative Impact – Credit scores will be lowered by 300-plus points (per loan) by foreclosure. The impact of a short sale—about half that much.
• Ineligibility for a Government Insured Loan – The homeowner will be ineligible for a government insured loan for 5-7 years (only two years in a short sale). A Foreclosure is the one credit report item that is almost impossible to have repaired.
• Possibility of Deficiency Judgment – Lenders can seek a deficiency judgment against the homeowner and collect any amount they do not recover at sale.
• Negative in Employment Credit Checks – Many employers run credit checks on prospective employees. Foreclosure is one of the top items that will put a potential new hire, or even current employment, in jeopardy.

Short sales have become the solution of choice for struggling homeowners across the U.S. But popular as it is, it’s also among the least understood in the loss mitigation industry. If you’re considering a short sale to steer clear of foreclosure, the first step is to get informed and make sure you know what you’re doing.

So what exactly is a short sale? In real estate, a short sale is the sale of a property for less than the amount owed on it. The lender agrees to accept the proceeds of the sale as full payment. In most cases, the borrower is freed from all obligations upon closing, although sometimes they still have to pay the remaining balance (known as the deficiency).

REASONS FOR SHORT SALES

The first requirement for a short sale approval is a valid reason. While you don’t have to be seriously delinquent to qualify, you do need to present a convincing situation. The following are some good reasons to apply for a short sale:

-Fallen market value: The unpaid balance, which may include expected prepayment penalties, may be higher than the home’s current value.

-Mortgage default or in near default: You may have missed several mortgage payments, or are in a tight situation which could lead to a potential default.

-Financial hardship: If you’ve lost your job, had an accident, or got divorced, your bank can approve a short sale provided that the hardship is over and you can get back on track.

1. Hire a realtor.
Look for an agent who has worked with short sales before, preferably in your area. This ensures that he or she is familiar with the short sale process and can help you get the best deal.

2. Verify property value.
If you’re working with a broker to sell your home, he or she can give you an official estimate of your home’s current worth. Otherwise, you will have to do your own analysis using the latest available market data for your neighborhood.

3. Work in additional costs.
Just like a regular sale, a short sale entails various closing costs that can drive up total expenses for both parties. These costs are usually incurred throughout the short sale process, such as legal fees and attorney’s fees.

4. Determine your debt.
The amount you owe against the home will be deducted from the total price. Depending on what you and your lender agree on, this can include late fees, past-due payments, taxes, and other expenses besides the mortgage itself.

5. Talk to your lender.
Once you have a plan on hand, call up your lender and ask about the short sale process. This varies from one bank to the other, so it’s important to get accurate information. It may take a while to get the right person on the line, but it’s worth the wait.

6. Find a buyer.
If your lender approves your short sale proposal, you can start marketing your home and looking for potential buyers. The short sale process usually sets a tight deadline for selling, so it may help to work with a real estate agent to help sell the home quicker.

BUYING A SHORT SALE:

1. Hire a realtor.
Look for an agent who has worked with short sales before, preferably in your area. This ensures that he or she is familiar with the short sale process and can help you get the best deal.

2. Look for a property.
Your realtor will give you a list of short sale properties for sale, but nothing’s stopping you from looking them up yourself. Generally, the longer a home has been on the market, the more its price has come down, and the better the deal you’re likely to get.

3. Arrange your finances.
Your agent can also help you decide on financing and apply for a mortgage loan. Many sellers will only accept offers from pre-approved buyers, so it may be a good idea to get a pre-approval from your lender.  You agent can help you wit this.

4. Close the sale.
The closing is where ownership of the home is officially transferred from the seller to the buyer. Days before the closing, make sure you have everything in order, down to the most minor details. If all goes well, you can close the short sale within about 30 days. Caution: If things don't go smoothly negotiations may take 4-6 months. The better the deal for the buyer the longer it may take.  Saving $50,000 to $100,000 makes the process worth the wait.

Foreclosure numbers are growing daily. Of the one hundred twenty or so million homes in America, more than 4% or roughly 4.8 million of them are facing foreclosure. Some of these homeowners are able to work their way out of foreclosure, however, according to MBA there were about 500,000 homes that went through foreclosure last year. Foreclosure threatens these homeowners because they are late or seriously behind on their mortgage payments.

The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.

Foreclosure is applied to any method of enforcing payment of the debt secured by a mortgage, by taking and selling the estate. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.

Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). Depending on your state, the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.