Losing your home due to the inability to make your mortgage payments is quite possibly the worst financial scenario you could ever find yourself facing. In fact, a foreclosure puts a big negative mark on your credit report, where recovering from 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 secure any kind of credit, leaving you completely helpless.
Consider a Short Sale as a Smarter Credit Position
The downfalls of a foreclosure are frightening and sometimes irreparable. Therefore, any choice that promises a way out of the foreclosure is a better alternative. This process is one option for homeowners who are mired in financial woes. Simply put, a short sale means you sell your property at a price that is lower than the financed amount you owe the bank.
The best part about short sales is that they create a very good situation for everyone who is involved in the transactions:
* The property owner is able to stave off foreclosure and get their loan paid off.
* The lender is able to get paid a portion of the loan back without going through all the drawn out legal procedure, costly attorney expenses, of foreclosure and marketing the repossessed property
* The new buyer is able to buy the home at a reduced price.
Thinking about Doing a Short Sale? Keep the Following Things in Mind
The first safeguard measure you must take when settling your mortgage through this process is to get it in writing from the lender, stating that all your debts are forgiven. Other considerations to bear in mind to stay away from any potential negative consequences of the process are:
* Guard your FICO Score: Do not forget that a short sale is listed on your credit report. Therefore, get the lender to report it in the most positive light. For instance, if your report simply states that the debt is satisfied, your credit score will not be impacted. On the flip side, if your bank reports you settled for less than the full balance, your FICO score will drop automatically.
* Get tax advice: A tax liability on a short sale arises when the lender claims that the debt released should be shown as an income. A tax professional can assist you find alternatives to limit this cheap shot tax hit.
While a short sale is definitely a smarter choice to going through foreclosure on several grounds, a homeowner often has a hard time trying to convince the bank to agree to them right away. This is because the lender has to accept to forgo a part of the mortgage claim that they want to recover. Therefore, when faced with a tight financial situation, a short sale must be pursued as quickly as possible. The longer you put it off, the greater the amount of arrears, and the less likely that the bank will be to agree to the process. With that said, I have seen people live in their homes for several months without paying their mortgages and still complete a successful transaction. However, this is a bit risky and I would never suggest this strategy to anyone.
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 options. Certified short sale specialist and Scottsdale AZ Real Estate agent 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 advice on what the best strategy is for you. Having experienced Realtor work with you could protect you, your home, and your financial future.
Jen Wehner is an top producing 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