Posts Tagged ‘foreclosure’

Understanding Real Estate Short Sale

Thursday, August 6th, 2009

Foreclosure is a major problem in the real estate market nowadays with lots of people losing their jobs. A short sale can help a homeowner in foreclosure. When a homeowner cannot keep up with his or her mortgage payments, a real estate short sale may be a sound solution for the homeowner. You do not have to wait until you are late on your mortgage payments to start the short sale process. Find out what is a short sale and ask your Realtor early about doing a short sale when you know that you might not be able to keep up with your mortgage payments soon.

Understanding What a Short Sale is

A short sale is a sale of real estate in which the proceeds from the sale are smaller than the mortgage balance on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a mortgage balance because of an economic or financial hardship on the part of the mortgagor. This negotiation is all done by the bank’s loss mitigation department.

Stopping Foreclosure

A short sale is often done to stop foreclosure. Often a bank will allow a short sale if they think that it will result in less financial loss than going through with the foreclosure process as there are carrying costs associated with a foreclosure. A short sale is often faster and less expensive than a foreclosure. In short, a short sale is just a process of negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. The process does not wipe off the remaining mortgage balance unless the bank expressedly states it in writing.

Learning about Short Sale

There are plenty of books written about short sale. Some books are for homeowners facing foreclosure. These books explain to them what a short sale is and how it can help them save their properties from foreclosure. There are also books aimed at real estate investors wanting to take advantage of the foreclosure market. Foreclosed homes are often cheap so new home buyers and new real estate investors can buy them fairly easily. Examples of books on short sale are The Art of the Short Sale, Short sales: An Ethical Approach, Doctor Foreclosure: The Secret to a Successful Short Sale, and Short Sale: A Practical Approach.

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The Truth about Real Estate Market

Thursday, June 25th, 2009

Since there are so many people unemployed nowadays, many homeowners are unable to keep paying their house payments. Some of them have good, fixed rates but still, without jobs, they still cannot keep up. Some homeowners have adjustable rate mortgages and find their home payments adjust to twice what they were paying. Many homeowners cannot afford to stay in their homes so they should sell and move on. The problem is that, with falling home prices, they also find themselves with upside down mortgages. That means, they owe the mortgage companies more than their homes are worth. So, what are their options?

Should The Sell Their Homes?

The first thing that comes to mind for lots of homeowners is to sell and move on. But, if they were to sell their homes, they are likely to get less for them than what they owe the banks. So, selling may not be the right option. However, it is a good idea to talk to a real estate professional to make absolutely certain that there is no way to sell and walk away free and clear without having to come up with the rest of the money for the mortgage balance later on.

Should Homeowners Refinance?

Usually when you owe more than your home is worth, banks do not want to lend. But, there may be options that allow you to refinance your house or modify your loan especially when the rates are very low right now. If your credit is good and want to explore the option of refinancing or have any home loan questions, call your lender as well as other lenders for comparison. Sometimes, your own lender might not have the resources to help you but other banks may be able to.

Debt Relief After Foreclosure

Lots of homeowners cannot sell their homes, cannot refinance and cannot modify their loans. Then their mortgage companies file the foreclosure papers. Foreclosure severely hurt your credit so it is advisable to call your bank and try to negotiate with them before they foreclose. If they do foreclose, however, there is the Mortgage Forgiveness Debt Relief Act of 2007 that will help you a little bit. This Act allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

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Buying and Selling in a Slow Real Estate Market

Friday, June 19th, 2009

In this slow real estate market, it is much more difficult to sell a home than it is to buy a home. If you are a homeowner looking to sell your home, then you are likely to have to lower your price to compete in the market. Homes stay on the market for many months before they are sold these days. Some of them are never sold and the homeowners end up being in foreclosure because they cannot afford the monthly house payments.

Pricing is very important in a buyers’ market. Buyers will often do their research and shop around in the areas that they like. It is fairly likely that there will be a few houses on the market in the area that they are looking at. Eventually, it usually comes down to the price. If a home is good and the price is low, it is usually attractive to buyers. A large number of people lower their prices substantially in order to to sell their homes fast. You can get a free home valuation so that you have some ideas of what price you can set your home at. If you have a potential buyer interested in buying your home, then make sure that you make the deal as good as you can, otherwise, there are likely to be plenty of other sellers that the buyer can buy from instead.

When investing, buying or selling homes, you may want to get a real estate agent to help you. If you buy or sell using a realtor then you usually will have to pay a fee which is a percentage of the price of the home. You will need to find a realtor that knows your market and can bring you homes that you might want to consider. Some people work with more than one realtor. While you can sell or buy a home yourself, a realtor can offer lots of services that can help you. Nowadays, a lot of million dollar homes are sold for a fraction of their original prices. First time home buyers find that they can purchase a home for as little as a few thousand dollars a home. It is a good time to buy and invest in homes if you have the necessary resources to do so.

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Why People Have an Upside Down Mortgage

Sunday, April 26th, 2009

With the current housing market, it is not surprising that the foreclosure rate is up almost 50% in some areas and states. There are many homeowners who are having the upside down mortgage problem. The problem really began a while ago when the housing markets were booming in many places including Florida, California, and Nevada.

Many people were convinced that they could purchase homes that were really beyond what they could afford and then wait for the property values to go up even higher so that they can resell. Since there home values kept rising, there was no danger that they would not make the profit by selling these properties at a later date. After all, they have heard numerous times that many people were making so much money this way.

The credit market did not help then either. As property values shot up in many states and areas, there were lots of lending companies that were willing to give money to people with poor credit providing they were purchasing good homes. Therefore, people who did not make much money and did not have excellent credit were able to purchase expensive homes with expensive loans. They did not care about the high interest rates because their property values kept rising.

But soon enough the bubble burst and property values fell significantly. The values kept going down as lenders realized that they made a mistake in lending to people who could not afford to pay back. They started the foreclosure processes. But, by then, the home values had fallen so far down that even when people wanted to sell their homes, they were not getting enough money back to pay back their mortgages. Their mortgage balances were much higher than the values of their properties. Basically, they have upside down mortgages. Foreclosing on these homes is not a solution for banks either since they are not going to recoup the amount owed by the homeowners back. For the people, although, there are ways to delay foreclosure, when they are upside down on their home mortgages, they are going to lose their homes.

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