Having your home foreclosed on due to the inability to make your mortgage payments is perhaps the most devastating 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 lawsuit versus you as part of the foreclosure process. All this would then hinder your ability to obtain any kind of credit, leaving you with no credit.
Think about a Short Sale as a Better Credit Position
The downfalls of a foreclosure are frightening and often irreparable. Hence, any choice that offers a solution to the situation is certainly worth considering. This process is one option for property owners who are struggling in financial woes. To be clear, a short sale involves selling your home at a price that is below the financed amount you owe the bank.
The best part about short sales is that they create a win-win-win situation for all parties involved in the transactions:
* The property owner is able to avoid foreclosure and payoff their mortgage liability.
* The bank is able to recover his dues without going through all the drawn out litigation process, costly attorney expenses, of foreclosure and re-selling of the home
* The new buyer is able to purchase the property at a reduced price.
Thinking about Doing a Short Sale? Keep the Following Factors in Mind
The first safety measure you must take when negotiating your mortgage through this process is to get a written acknowledgment from the bank, stating that all your debts are forgiven. Other things to keep in mind to stay away from any potential negative consequences of the process are:
* Guard your credit rating: Do not forget that this transaction is mentioned on your credit report. Therefore, get the bank to report it in a way that is advantageous to you. For instance, if your credit report merely states that the loan is satisfied, your credit score will not be drastically affected. On the flip side, if your bank reports you settled for less than the actual amount owed, your score will drop automatically.
* Get tax information: A tax liability on a short sale surfaces when the lender claims that the debt forgiven should be shown as an income. A tax attorney can help 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 has a hard time trying to convince the lender to agree to them right away. This is because the lender 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 pursued as quickly as possible. The longer you put it off, the larger the amount of arrears, and the less likely that the lender will be to accept the process. With that said, I have seen homeowners stay in their properties for several months without making their mortgages and still complete a successful transaction. However, this is a bit risky 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 a seasoned professional help you in examining your strategies. Certified short sale specialist and Arizona Realtor Jen Wehner has been the #1 producer for people who want to avoid foreclosure in the State of Arizona for all Prudential real estate brokerages. There is no fee to speak to Jen and you can get feedback on what the best strategy is for you. Having experienced Realtor work with you could protect you, your home, and your financial future.
Think about a Short Sale as a Better Credit Position
The downfalls of a foreclosure are frightening and often irreparable. Hence, any choice that offers a solution to the situation is certainly worth considering. This process is one option for property owners who are struggling in financial woes. To be clear, a short sale involves selling your home at a price that is below the financed amount you owe the bank.
The best part about short sales is that they create a win-win-win situation for all parties involved in the transactions:
* The property owner is able to avoid foreclosure and payoff their mortgage liability.
* The bank is able to recover his dues without going through all the drawn out litigation process, costly attorney expenses, of foreclosure and re-selling of the home
* The new buyer is able to purchase the property at a reduced price.
Thinking about Doing a Short Sale? Keep the Following Factors in Mind
The first safety measure you must take when negotiating your mortgage through this process is to get a written acknowledgment from the bank, stating that all your debts are forgiven. Other things to keep in mind to stay away from any potential negative consequences of the process are:
* Guard your credit rating: Do not forget that this transaction is mentioned on your credit report. Therefore, get the bank to report it in a way that is advantageous to you. For instance, if your credit report merely states that the loan is satisfied, your credit score will not be drastically affected. On the flip side, if your bank reports you settled for less than the actual amount owed, your score will drop automatically.
* Get tax information: A tax liability on a short sale surfaces when the lender claims that the debt forgiven should be shown as an income. A tax attorney can help 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 has a hard time trying to convince the lender to agree to them right away. This is because the lender 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 pursued as quickly as possible. The longer you put it off, the larger the amount of arrears, and the less likely that the lender will be to accept the process. With that said, I have seen homeowners stay in their properties for several months without making their mortgages and still complete a successful transaction. However, this is a bit risky 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 a seasoned professional help you in examining your strategies. Certified short sale specialist and Arizona Realtor Jen Wehner has been the #1 producer for people who want to avoid foreclosure in the State of Arizona for all Prudential real estate brokerages. There is no fee to speak to Jen and you can get feedback on what the best strategy is for you. Having experienced Realtor work with you could protect you, your home, 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 personal blog here ARIZONA Real Estate AgentS
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