Having your home foreclosed on due to the inability to meet the monthly payment obligations is perhaps the worst financial scenario 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, the bank may file a lawsuit versus you as part of the foreclosure process. Having gone through the foreclosure it will certainly dampen your ability to secure any kind of credit, leaving you with no credit.
Think about a Short Sale as a Better Credit Position
The downfalls of a foreclosure are scary and sometimes beyond repair. Hence, any choice that offers a solution to the foreclosure is a better alternative. A short sale is one option for homeowners who are struggling in financial turmoil. Simply put, a short sale means you sell your home 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 scenario for all parties involved in the transactions:
* The property owner is able to avoid foreclosure and payoff their mortgage liability.
* The lender is able to recover his dues without going through all the drawn out legal procedure, costly attorney expenses, of foreclosure and re-selling of the home
* The new home buyer is able to buy the home at a lower price.
Considering a Short Sale? Keep the Following Things in Mind
The first safety measure you should 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 credit rating: Do not forget that a short sale is listed on your credit report. Therefore, get the bank to report it in the most positive light. For example, if your credit report simply states that the debt is satisfied, your score will not be impacted. On the other hand, if your lender reports you closed out 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 bank claims that the amount of debt forgiven should be shown as an income. A tax professional can assist you make some choices 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 has a hard time trying to convince the lender 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 executed as quickly as possible. The longer you wait, the greater the amount of arrears, and the less likely that the lender will be to agree to the process. With that said, I have seen homeowners stay in their homes for several months without paying their loan payments and still complete the transaction. Of course this is a bit risky and I would never recommend this strategy to a client.
If you, or someone you know, are looking at a foreclosure situation you will want to have a seasoned professional assist you in examining your options. Certified short sale expert and Arizona Realtor Jen Wehner has been the #1 producer for short sale clients in the State of Arizona for all Prudential real estate brokerages. There is no fee to talk to Jen and you can get feedback on what the best choice is for you. Having experienced Realtor work with you could shield you, your credit standing, and your financial future.
Think about a Short Sale as a Better Credit Position
The downfalls of a foreclosure are scary and sometimes beyond repair. Hence, any choice that offers a solution to the foreclosure is a better alternative. A short sale is one option for homeowners who are struggling in financial turmoil. Simply put, a short sale means you sell your home 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 scenario for all parties involved in the transactions:
* The property owner is able to avoid foreclosure and payoff their mortgage liability.
* The lender is able to recover his dues without going through all the drawn out legal procedure, costly attorney expenses, of foreclosure and re-selling of the home
* The new home buyer is able to buy the home at a lower price.
Considering a Short Sale? Keep the Following Things in Mind
The first safety measure you should 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 credit rating: Do not forget that a short sale is listed on your credit report. Therefore, get the bank to report it in the most positive light. For example, if your credit report simply states that the debt is satisfied, your score will not be impacted. On the other hand, if your lender reports you closed out 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 bank claims that the amount of debt forgiven should be shown as an income. A tax professional can assist you make some choices 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 has a hard time trying to convince the lender 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 executed as quickly as possible. The longer you wait, the greater the amount of arrears, and the less likely that the lender will be to agree to the process. With that said, I have seen homeowners stay in their homes for several months without paying their loan payments and still complete the transaction. Of course this is a bit risky and I would never recommend this strategy to a client.
If you, or someone you know, are looking at a foreclosure situation you will want to have a seasoned professional assist you in examining your options. Certified short sale expert and Arizona Realtor Jen Wehner has been the #1 producer for short sale clients in the State of Arizona for all Prudential real estate brokerages. There is no fee to talk to Jen and you can get feedback on what the best choice is for you. Having experienced Realtor work with you could shield you, your credit standing, and your financial future.
About the Author:
Jen Wehner is an top producing Real Estate Agent located 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 personal blog here ARIZONA Real Estate AgentS
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