Having your home foreclosed on due to the inability to meet the monthly payment obligations is quite possibly 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 several years. Moreover, a mortgage lender may file a legal case versus you as part of the foreclosure action. All this would then hinder your ability to obtain any kind of credit, leaving you completely helpless.
Consider a Short Sale as a Smarter Credit Decision
The downfalls of a foreclosure are frightening and often beyond repair. Therefore, any option that promises a way out of the situation is certainly worth considering. This process is one choice for homeowners who are mired in financial turmoil. To be clear, a short sale means you sell your home at a price that is lower than the financed amount you owe the bank.
A nice component with short sales is that they create a very good scenario for everyone who is involved in the transactions:
* The seller is able to stave off foreclosure and payoff their mortgage liability.
* The lender is able to recover his dues without going through all the long litigation process, costly attorney expenses, of foreclosure and marketing the repossessed property
* The new home buyer is able to buy the home at a reduced price.
Considering a Short Sale? Keep the Following Factors 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 bank, clearly 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:
* Protect your FICO Score: Do not forget that a short sale is listed on your credit report. Therefore, get the lender to report it in a way that is advantageous to you. For example, if your report simply states that the loan is satisfied, your score will not be drastically affected. On the flip side, if your lender 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 arises when the bank claims that the amount of debt forgiven should be treated 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 borrower often struggles 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 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 bank will be to accept the process. With that in mind, I have seen people live in their homes for many months without making their mortgages and still complete a successful transaction. Of course 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 scenario you will want to have an experienced Realtor assist you in examining your choices. Certified short sale expert and Arizona Realtor Jen Wehner has been the top 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 an expert work with you could shield you, your home, and your financial future.
Consider a Short Sale as a Smarter Credit Decision
The downfalls of a foreclosure are frightening and often beyond repair. Therefore, any option that promises a way out of the situation is certainly worth considering. This process is one choice for homeowners who are mired in financial turmoil. To be clear, a short sale means you sell your home at a price that is lower than the financed amount you owe the bank.
A nice component with short sales is that they create a very good scenario for everyone who is involved in the transactions:
* The seller is able to stave off foreclosure and payoff their mortgage liability.
* The lender is able to recover his dues without going through all the long litigation process, costly attorney expenses, of foreclosure and marketing the repossessed property
* The new home buyer is able to buy the home at a reduced price.
Considering a Short Sale? Keep the Following Factors 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 bank, clearly 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:
* Protect your FICO Score: Do not forget that a short sale is listed on your credit report. Therefore, get the lender to report it in a way that is advantageous to you. For example, if your report simply states that the loan is satisfied, your score will not be drastically affected. On the flip side, if your lender 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 arises when the bank claims that the amount of debt forgiven should be treated 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 borrower often struggles 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 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 bank will be to accept the process. With that in mind, I have seen people live in their homes for many months without making their mortgages and still complete a successful transaction. Of course 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 scenario you will want to have an experienced Realtor assist you in examining your choices. Certified short sale expert and Arizona Realtor Jen Wehner has been the top 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 an expert work with you could shield you, your home, and your financial future.
About the Author:
Jen Wehner is an top producing Real Estate Agent based in Scottsdale Arizona. If you would like to learn 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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