1. Should I consider it?

2.  Most people buy a house with money they borrow from a lender like a bank or a credit union. The lender in turn holds a lien on the property. This is basically an agreement that if the borrower fails to repay the loan the lender will take possession of the property.  Theoretically the lender can then resell the property to somebody else and recover the money that was lent to the borrower.

3.  It happens sometimes (and lately more often that the ever), that (because of the market conditions) the property has lost so much value that the outstanding amount of the loan cannot be cover by selling the property.  If the borrower (and owner of the property) is unable to repay the dept the bank can take possession of the property through the process of foreclosure, but its market value cannot cover for the outstanding amount of the loan.

4.  In such a case the bank usually agrees to a Short Sale. That means that the house will be sold by the owner at market value and the money will go to the bank. This way the bank will lose some money but will at least save on the (high) cost of a foreclosure.

5.  A Short sale should never be the first choice. Both the homeowner and the bank will lose money in this transaction. Usually the case is that the homeowners have being paying their mortgage payments for a few years and this money will be lost in a case of a short sale or foreclosure.  The homeowner should first seek professional help and try to keep their home. A good place to start is Virginia Foreclosure Prevention Task Force (virginiaforeclosureprevention.com).

6. …a short sale should be considered, once:  The homeowner is no longer able to make the monthly mortgage payments. This means that a significant change has happened that has substantially affected the homeowner’s finances. This does not have to be a monumental event. For a family that lives on a very tight budget, even a big increase of the gas price can make them unable to meet their obligations to the bank. Whatever the hardship is though, the homeowner must be able to prove.  The total amount owed to the bank is higher than the value of the property.  If the housing market is declining or steady. In such a market there is little hope that the property will regain value to cover the outstanding mortgage amount any time soon.

7.  If a Realtor ® handles the short sale it’s not trouble for the home owners. They only have to provide the documents needed for the process and cooperate in the sale. The Realtor ® will take care of the process.  Further than that there are some definite benefits that make the short sale much more favorable for a homeowner than a foreclosure.

8. ForeclosureShort Sale  A Foreclosure will lower your credit score by 250-300 points.  It affects it for a time period of over 4 years  If the homeowner keeps making the mortgage payments the credit score can take a hit of as little as 50 points. This can last for as little as 12-18 months

9. ForeclosureShort Sale  Foreclosure will remain as public record in your credit history for 10 or more years  A Short Sale alone will not challenge most security clearances

10. ForeclosureShort Sale  Many employers require credit checks on job applicants. A foreclosure is one of the most negative items of credit history in such cases.  Employers are also regularly checking the credit of employees in sensitive positions. In many cases a foreclosure can become grounds for reassignment or even termination.  Since a Short Sale is not reported in the credit report it cannot affect employment.

11. ForeclosureShort Sale  Prospective borrower has to report a foreclosure in every future loan application. This will affect the rates in future loans.  For Fannie Mae related loans a foreclosure means ineligibility for 5 to 7 years.  A Short Sale is not required to be reported in a loan application like the foreclosure does.  A successful Short Sale will prevent you from getting a Fannie Mae related loan for no more than 2 years.

12.  You have to make your own decision. Should you choose to explore your options further I can help you.  As a Certified Short- sale Professional I can provide you with the essential information you need to make the best decision for you and your family. Call me or email me now. (540) 840 2141 billgeron@gmail.com All requests are treated as confidential.