Having your home foreclosed on due to the inability to make your mortgage payments is perhaps the worst financial situation you could ever face. Truthfully, a foreclosure puts a big negative mark on your credit report, where improving it could take several years. Further salting your wounds, the bank may file a legal case against you as part of the foreclosure action. All this would then hinder your ability to secure any kind of credit, leaving you completely at a disadvantage for new credit.
Consider a Short Sale as a Better Credit Decision
The pitfalls of a foreclosure are devastating and sometimes beyond repair. Hence, any choice that offers a solution to the situation is a better choice. This process is one choice for homeowners who are mired in financial turmoil. To be clear, a short sale involves selling your home at a price that is below the financed amount you owe the bank.
A nice component with short sales is that they create a win-win-win situation for everyone who is involved in the transactions:
* The seller is able to stave off foreclosure and get their loan paid off.
* The bank is able to recover his dues without going through a lengthy litigation process, legal fees, of foreclosure and marketing the repossessed property
* The new home buyer is able to buy the home at a reduced price.
Thinking About Doing a Short Sale? Keep the Following Factors in Mind….
The first safeguard measure you should 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 FICO Score: Do not forget that a short sale is listed on your credit report. This is why you want your bank to report it in a way that is advantageous to you. For instance, if your report merely states that the loan is satisfied, your score will not be drastically affected. On the flip side, if your bank reports you closed out 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 bank claims that the amount of debt forgiven should be shown as an income. A tax attorney can help you make some choices to limit this liability.
While a short sale is certainly a superior alternative 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 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 larger the amount of arrears, and the less likely that the lender will be to agree to the process. With that said, I have seen people live in their properties for many months without making their loan payments 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 is facing a foreclosure scenario you will want to have a seasoned professional assist you in exploring your strategies. Certified short sale specialist and Scottsdale AZ real estate agent Jen Wehner has been the #1 top producer for short sale clients in Arizona for all Prudential real estate brokerages. There is no fee to speak to Jen and you can get advice on what the best strategy is for you. Having an expert work with you could protect you, your house, and your financial future.
If you are in Arizona and facing foreclosure and would like some more information on your choices you can click here ARIZONA SHORT SALE INFORMATION
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