Are you behind on your mortgage payments? Not getting a response from the bank about your loan modification? Don't give up yet. You have another option. You can sell your house even if you owe more than it is worth. It is called a short sale and many people are turning to this option as a last resort to do damage control to their credit report.
What is a short sale? Well a short sale is when you sell your home for less than it is worth. It is called short because of the shortage in money not because it is a quick process. If anyone tells you this is a short process they are lying.
Why would the bank take less money than you owe? So far the real estate market hasn't picked up much. The longer a home sits the worse shape it will be in and the value can decline even more. If a home goes into foreclosure it could take months before a real estate company is able to list it and then you have an empty house sitting vulnerable to vandalism which obviously reduces the value even more. This is a vicious cycle because then values of whole neighborhoods decrease. Also for a bank to take posession of a home requires courts and lawyers and a lot of paperwork which all costs them money.
What is the benfit for you to short sell your home? If your home is foreclosed on you will have to wait 5 years before you can buy another home. When you short sell it you can buy another home within 2-3 years.
What qualifies as a hardship to short sell a home? There are many reasons. They include: Mortgage interest payments have gone up, negative equity on your home, divorce, loss of extra income or loss of job, job relocation, loss of rental income, medical issues and having a balloon payment due on your mortgage.
You should always consult your tax person to find out the penalties possible if you end up doing a short sale. You should not have to pay an upfront fee to save your home!
Until next time....
Amanda Lynn Smith
Realty America GMAC
www.AmandaLynnSmith.com
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