Foreclosures and Short Sales: Mistakes and Myths That May Surprise You
The â€śFâ€ť word. Most people fear foreclosures because they conjure up images of debt collectors calling, a mysterious knock on the door, and other unspecified fears. The truth is that foreclosures arenâ€™t the end of the world, but they also arenâ€™t your only option. Most people succumb to the myths that surround foreclosures and short sales without ever digging deep to learn the facts.
Foreclosures Are The End
Most people believe that foreclosures are the end, so they walk away from the home or they give up. What happens after is left up to chance. And, most people figure that once the bank repossesses the house, theyâ€™re free of any further liability. Unfortunately, this just isnâ€™t true. If you live in a state where deficiency judgments are legal, the bank can come after you for the balance of the mortgage after the foreclosure sale. Thatâ€™s right. You could still have to pay off your loan – and you donâ€™t have a house now.
There Are No Options To A Foreclosure
Most people believe that there are no alternatives to a foreclosure. This simply isnâ€™t true. Short sales are one of the most popular alternatives, they donâ€™t necessarily have to ruin your credit, and you can get out of the house on terms that are favorable to both you and the bank.
A West Orange Short Sales Specialist can help you determine if your home is a good candidate for a short sale. Not all of them are.Â
Banks Donâ€™t Like Short Sales
Banks love short sales. Well, OK, they donâ€™t love them, but they like them more than foreclosures. Thatâ€™s because a short sale can cost a bank more than $50,000.
Short Sales Arenâ€™t Common
Short sales make up between 10 and 50 percent of the total home sales in some markets. Theyâ€™re common, and theyâ€™re becoming more common because the financial crisis in 2008 caused many homeowners to go â€śunderwaterâ€ť on their home mortgage. Banks have opened up to the idea of a short sale because it allows them to recoup at least some of the money.
Itâ€™s Hard To Sell Short
Itâ€™s not all that difficult to sell short. It shouldnâ€™t cost you any money out of pocket, either. In fact, many banks will give you between $3,000 and $30,000 up-front to stay in the home until the house is sold – these are called cooperative short sales. In exchange, you agree to take care of the place and help sell it. The short sale process is simpler than a foreclosure, but itâ€™s not always simple, as such. If you donâ€™t follow the procedures to the letter, then yes, you may get denied.
â€śI Can Sell Short At Any Timeâ€ť
Unfortunately, some homeowners wait too long to sell short. Your best option is to sell when you have no late payments. As you get behind on your mortgage, it becomes harder and harder to set up a short sale arrangement with the bank.
You Were Denied For Loan Modification, So You Canâ€™t Do A Short Sale
This one actually seems very logical on the surface. However, most banks require you go through a loan modification application process before agreeing to a short sale. Think of it as part of the process. If youâ€™re not late on your mortgage payments, and you move quickly to sell the house, you can dodge a bullet and even buy a new house right away.
Lisa Anders has amassed several years of experience in the real estate realm. Now semi-retired, she likes to help people achieve home ownership by posting online. Look for her informative articles mainly on homeowner and real estate blogs.