Mortgage loan payments too high? Property value dropped? Feeling frustrated, overwhelmed, ready to just walk away?
STOP! Before abandoning your familys favorite best-loved house, explore all your options.
Options? Yes, you do have choices. Many homeowners who are in default on their loans dont know they have options available. Over a dozen solutions are featured in our new eBook, Stop Foreclosure Fast: Solutions to Save your House. One secret solution we reveal is a technique called a Short Sale, a method of selling your house before it goes to foreclosure.
But I owe more money on the house than its worth. I cant sell it, you say. Well, that is a myth. The truth is that you CAN sell your house even if youre Upside Down (meaning you owe money on it than its worth).
What happens to the money thats missing? In other words, if you bought your house for a $400,000 loan, but you can only sell it for $300,000, how will you close escrow if you cant cough up the extra $100,000 (the short)?
Because your lender agrees to take a loss. Thats what a short sale is all about. Due to our current real estate market decline, real estate agents, mortgage lenders, and bankers are now learning how to do Short Sales and help borrowers avoid foreclosure.
Lenders actually prefer short sales. Even though they take a loss from short sales, their losses are LESS than if they went through the foreclosure process. For example, a lender may lose $30,000 with a short sale, but if the same house went through foreclosure, the bank may lose $80,000. So short selling is really to their benefit, because it helps them reduce (minimize or mitigate) their losses.
But why is a short sale better than a foreclosure for you, the borrower? Heres seven reasons why a short sale is an advantage over a foreclosure.
1. Integrity. You are the homeowners, you borrowed the money, you agreed to the repayment. So you want to do your best to keep up your part of the contract. Even if you cant make the full payment and pay off your morgage lender in full, there is a lot of satisfaction in knowing you did your best to help the lender avoid a big loss.
2. Pride & Dignity. If you hire a Realtor®, theyll sell your house just like all the other houses in your neighborhood. Your real estate agent will put up a sign, put ads online, and hold open houses. You can tell the neighbors that youre selling your house. You dont have to tell them that your loan is in default. You dont need to try to hide the foreclosure. No sheriff will come to evict you, theres no public record of foreclosure. Youll still hold your head high with pride and dignity.
3. Lower Debt Discharge Income. If you think that abandoning your house and walking away will solve all your problems, THINK AGAIN! If youre upside down and the lender has to take a loss, they will send you a 1099-C tax form at the end of the year. Their loss (deficiency) gets reported to the IRS as your income. And youll probably have to pay tax on this income. So its to YOUR benefit to help the lender incur as SMALL a loss as possible. Because that means LESS TAXES youll have to pay to the IRS. Are you exempt from this IRS law? Maybe or maybe not. Although a new exemption law went into effect, check with your accountant to see if you qualify of if youll have to pay more taxes.
4. Better Credit Report. Lets face it, a short sale will hurt your credit. Itll subtract about 200 points from your credit score, can stay on report for 7 years. Thats pretty substantial. BUT a foreclosure is even worse — it subtracts about 400 points from your credit score, and can stay on your report for 10 years. Its very difficult to get credit after a foreclosure. And its difficult to get removed from your credit report, because its a public record.
5. Lender may Reward You. Some lenders actually give cash back to the homeowners after a successful short sale up to $1,500. They show their appreciation for your cooperation and helping them minimize their losses.
6. Keep the Scammers Away. Instead of getting mixed up in a quitclaim deed scheme, do it the legit way, let your Realtor® screen and qualify the buyers.
7. Youre in Good Hands. When you sell, you wont be at the mercy of the lenders foreclosure date. Youll know when youre moving, theres no need to wonder and worry. You and your family can feel secure in the hands of a Realtor®. Your professional real estate agent can deal with the lender for you. A Realtor® experienced in short sales will know what documents your lender requires to get it approved. They will help you get the correct paperwork together and submit it to the lender. Less hassle and lower stress for you, and positive energy available to focus on your next home!
Be an empowered homeowner. Dont give up the fight yet, well help arm you with tools to avoid foreclosure. Many resources are available on our web site, www.Stop-Foreclosure-Fast.info. You owe it to yourself, your lender, and your family to check it out!