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Many mortgages are upside down
Throughout most of the country, property values have been falling at an alarming rate, leaving many homeowners sitting in a house that is no longer worth the amount of the loan used to purchase it. |
Others homeowners have seen the interest rates on their Adjustable Rate Mortgages (ARM) shoot up in recent months, drastically increasing the total they will pay on their mortgages to well beyond the current value of their home.
These are two of the most common circumstances that have produced millions of "upside down" mortgages -- loans in which the amount still owed is greater than the current value of the home which secured the loan.
An upside down mortgage can leave a homeowner feeling trapped in what was supposed to be a good investment but has become a money pit. In the wake of discouragement and the financial hardship of increased monthly payments, many homeowners will soon find themselves facing the very real threat of foreclosure.
Short sales are a good solution and cost NOTHING to the home owner
A short sale is often a great solution to avoid or stop foreclosure. In a short sale, the home is sold for a price that falls short of the balance owed on the mortgage. The bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the borrower.
In a properly negotiated short sale, both the lender and the borrower benefit. The lender avoids the time and cost of reposessing a house and then reselling it at auction or on the open real esate market, and they are able to recover an acceptable portion of the money they origianally loaned. The borrower benefits by getting out from under a mortgage they can no longer afford, without ruining their credit rating with a bankruptcy or foreclosure.
We specialize in short sales and we are well prepared to negotiate with your lender and buy your home so you do not have to suffer through the foreclose process. We are specialists who will work with the lender in all aspects of the short sale process, and best of all, because we are the actual buyer, we do not charge you a penny for this service.
Even if you are close to an auction date, once we start working with your lender toward a short sale, you as the owner will benefit from staying out of foreclosure, and in most cases will be able to stay in your home for an additional few months.
A short sale can stop foreclosure
The truth is, the bank doesn't want your home because if they complete the foreclosure process they have no option but to sell the house at auction or on the open market, usually for less than the amount of the mortgage. Add the legal costs, real-estate fees and other costs, and the bank has lost even more money.
The lender benefits from a short sale by receiving more money than would have been generated had the home gone into foreclosure and been sold at auction or the open market. It simply costs the bank less to accept a short sale than to complete the foreclosure process and resell the home.
For the home owner, advantages include avoidance of having a foreclosure entered on their credit history. They can also retain some measure of control over how the debt is resolved.
Lenders are prepared for short sales
Banks do not want to own real estate, they want to lend money and collect interest. When a bank takes a property back via foreclosure, it is a long and expensive process and often results in holding the property in their inventory as a non-performing asset.
Banks have a limit to the amount of non-performing assets they want to hold. Once this limit is exceeded, they a have strong incentive to get rid of the properties at discount prices. For a lender, doing a short sale avoids many of the costs associated with the foreclosure process. Attorney fees, delays from borrower bankruptcy, damage to the property, costs associated with resale, property tax, insurance, etc. all must be paid by the bank during a foreclosure.
In a short sale scenario, the lender is able to cut its losses by getting rid of the property faster. Again, this is particularly true in Arizona right now, not only because the real estate market is so slow, but also because the Arizona foreclosure rate is high.
We're here to help
If you find yourself facing the possibility of foreclosure, or if you'd like to find out if a short sale is right for you, we'd love to talk with you.
Ask for a free, no obligation consultation today. Do not wait. The short sale process can be long and you don't want to run out of time before the foreclosure auction. We will review your information, determine if you are a good candidate for a short sale, and contact you with the appropriate paperwork. Remember, once you return the paperwork to us, it can be 30-60 days for a short sale to get approved. Fill out and return the paperwork as quickly as possible for your best chance at approval.
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