Having your home foreclosed on due to the inability to make your mortgage payments is perhaps the worst financial situation you could ever face. In fact, a foreclosure puts a big negative mark on your credit report, where improving it could take years. Further, a mortgage lender may file a legal case against you as part of the foreclosure process. Having gone through the foreclosure it will certainly dampen your ability to secure any kind of credit, leaving you with no credit.
Consider a Short Sale as a Smarter Credit Decision
The downfalls of a foreclosure are frightening and sometimes irreparable. Hence, any option that offers a solution to the foreclosure is a no brainer. A short sale is one choice for homeowners who are buried in financial turmoil. To be clear, a short sale involves selling your property at a price that is lower than the financed amount you owe the mortgage lender.
The best part about short sales is that they create a win-win-win scenario for everyone who is involved in the transactions:
* The seller is able to avoid foreclosure and payoff their mortgage liability.
* The lending institution is able to get paid a portion of the loan back without going through all the long legal procedure, high legal fees, of foreclosure and re-selling of the home
* The new buyer is able to buy the home at a lower price.
Thinking about Doing a Short Sale? Keep the Following Things in Mind
The first safety measure you must take when settling your loan payoff through this process is to get it in writing from the lender, stating that all your debts are absolved. Other things to keep in mind to stay away from any possible negative consequences of the process are:
* Protect your FICO Score: Do not forget that this transaction is mentioned on your credit report. This is why you want your lender to report it in the most positive light. For example, if your credit report merely states that the loan is satisfied, your score will not be drastically affected. On the flip side, if your bank reports you settled for less than the actual amount owed, your FICO score will take a huge drop.
* Get tax advice: A tax liability on a short sale surfaces when the bank claims that the amount of debt forgiven should be treated as an income. A tax attorney can assist you make some choices to limit this cheap shot tax hit.
While a short sale is certainly a smarter choice to going through foreclosure on several grounds, a homeowner often struggles to convince the bank to agree to them right away. This is because the bank has to agree to forgo a part of the mortgage claim that they want to recover. Therefore, when faced with a financial crunch, a short sale must be executed as soon as possible. The longer you put it off, the greater the amount of arrears, and the less likely that the bank will be to accept the process. With that in mind, I have seen people live in their properties for many months without making their mortgages and still complete the transaction. However, this is a bit tricky and I would never suggest this strategy to a client.
If you, or someone you know, are looking at a foreclosure situation you will want to have an experienced Realtor assist you in exploring your choices. Certified short sale expert and Arizona Realtor Jen Wehner has been the top producer for short sale clients in Arizona for all Prudential real estate brokerages. There is no fee to talk to Jen and you can get feedback on what the best route is for you. Having experienced Realtor work with you could guard you, your house, and your financial future.
Consider a Short Sale as a Smarter Credit Decision
The downfalls of a foreclosure are frightening and sometimes irreparable. Hence, any option that offers a solution to the foreclosure is a no brainer. A short sale is one choice for homeowners who are buried in financial turmoil. To be clear, a short sale involves selling your property at a price that is lower than the financed amount you owe the mortgage lender.
The best part about short sales is that they create a win-win-win scenario for everyone who is involved in the transactions:
* The seller is able to avoid foreclosure and payoff their mortgage liability.
* The lending institution is able to get paid a portion of the loan back without going through all the long legal procedure, high legal fees, of foreclosure and re-selling of the home
* The new buyer is able to buy the home at a lower price.
Thinking about Doing a Short Sale? Keep the Following Things in Mind
The first safety measure you must take when settling your loan payoff through this process is to get it in writing from the lender, stating that all your debts are absolved. Other things to keep in mind to stay away from any possible negative consequences of the process are:
* Protect your FICO Score: Do not forget that this transaction is mentioned on your credit report. This is why you want your lender to report it in the most positive light. For example, if your credit report merely states that the loan is satisfied, your score will not be drastically affected. On the flip side, if your bank reports you settled for less than the actual amount owed, your FICO score will take a huge drop.
* Get tax advice: A tax liability on a short sale surfaces when the bank claims that the amount of debt forgiven should be treated as an income. A tax attorney can assist you make some choices to limit this cheap shot tax hit.
While a short sale is certainly a smarter choice to going through foreclosure on several grounds, a homeowner often struggles to convince the bank to agree to them right away. This is because the bank has to agree to forgo a part of the mortgage claim that they want to recover. Therefore, when faced with a financial crunch, a short sale must be executed as soon as possible. The longer you put it off, the greater the amount of arrears, and the less likely that the bank will be to accept the process. With that in mind, I have seen people live in their properties for many months without making their mortgages and still complete the transaction. However, this is a bit tricky and I would never suggest this strategy to a client.
If you, or someone you know, are looking at a foreclosure situation you will want to have an experienced Realtor assist you in exploring your choices. Certified short sale expert and Arizona Realtor Jen Wehner has been the top producer for short sale clients in Arizona for all Prudential real estate brokerages. There is no fee to talk to Jen and you can get feedback on what the best route is for you. Having experienced Realtor work with you could guard you, your house, and your financial future.
About the Author:
Jen Wehner is an award winning Real Estate Agent based in Scottsdale Arizona. If you would like to discover more about buying or selling homes in Arizona, click here SCOTTSDALE REAL ESTATE or you can visit Jen's real estate blog here ARIZONA Real Estate AgentS
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