Acceptance is finally settling in as homeowners are realizing the real estate market has truly shifted. The competition to sell their home is fierce as other homeowners are realizing they also owe too much to list their home competitively. Those attractive low payments that lured you to an Option A.R.M. loan earlier are coming to an end.
For many homeowners the new mortgage payment is simply too high for them to afford. Some homeowners are considering refinancing. Unfortunately they are discovering their home isn’t worth what it was last year. At this point they have to explore other alternatives.
Some homeowners think selling their home is the best solution and immediately turn to a realtor for help only to be told the unfortunate news their home won’t sell for enough to pay all of the fees, real estate commissions, and pay off the balance of the mortgage loan. Some intrepid souls may even try to sell their home on their own. Eventually, after months of effort and waiting, many are faced with inevitable foreclosure.
All is not lost even in this 11th hour as there is a viable alternative. Banks, not wanting to be saddled with an inventory of unsold property, are willing to settle debts owed by homeowners through a process known as a „Short Sale.“
A „Short Sale“ occurs when a homeowner is upside down on their home and ends up selling their property for less than what is owed on the mortgage. The lender agrees to accept the lesser payment as satisfying the loan amount. The seller receives no money from the sale of the home and the lender does not report as a foreclosure to the credit bureau.
To qualify for a „Short Sale“, homeowners must demonstrate a hardship and be financially insolvent. The homeowner should be able to demonstrate inability to make the loan payment. Most importantly, homeowners must prove a willingness to cooperate with the process.
Some homeowners who have exercised a successful short sale have voiced concerns over receiving an IRS Form 1099 from the lender for the amount of the loan that was forgiven. The lender may not send a 1099 and instead grant a total release. Even if you do receive a 1099 consider the alternatives: a foreclosure on your credit report that stays there for 7-10 years, lowering your credit score an average of 100 points. A short sale stays on your credit for a much shorter period and may lower your score by an average of 45 points.
For the potential real estate buyer a short sale offers a great opportunity to purchase what may earlier have been an unaffordable property. Typically but the short sale listings are lower than similar properties the buyer needs to be aware the process can take much longer than usual. Lenders may take weeks to review their offer so the buyer has to be patient. For the patient buyer however, the reward may be a great home at a great price.Immobilienmakler Heidelberg Makler Heidelberg
Source by Chuck Lunsford