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Carlos Caraballo's Blog

By Carlos Caraballo | Agent in Fairfax County, VA

Short Sale 2015

U.S. home values fell in the first quarter of 2011 at the fastest rate since late 2008, the number of homeowners under water or, those who owe more on the mortgage than their house is currently worth amounted to 28.4 percent of a single-family homeowners.
Property values are expected to fall again this year, There already is evidence of further price drop.
The Greater Capital Association of REALTORS continues reported that home listing posted in March put the average price at $ 282,103, a decline of - 4.3% with 2010, homes with troubled mortgages continued to dominate the market in March, with more than 48 percent either foreclosure or short sale, where the owner owes more on the mortgage than the home is worth.
Few Americans expect the housing market recover before 2014 and to me this is really optimistic expectation, with this gloomy panorama we have to conclude that recovery is not an option in the near future, REO, short sales and foreclosures are going keep ruling this market for the next 5 years .

Choices are limited for home sales these days if you do not have a mortgage already paid off or have a lot of equity in the home. If you still have a mortgage, one of the three scenarios bellow is possible when must move out of your home:

  1. Your home goes into foreclosure and gets sold to another buyer by the bank
  2. No one purchase the home after foreclosure and it become a bank-owned property knows as a difficult.
  3. You sell your home to the highest and best bidder similar to a regular sale but requiring bank approval before closing (short sale).

If you owe more on your home than the home is worth, and don't want to declare bankruptcy (because it won't solve your financial problem), you can hire a short sale real estate specialist to market the property and negotiate a short sale agreement with your lender or mortgage servicer. A short sale allows you to avoid foreclosure and minimize the damage to your credit score. You may avoid a deficiency judgment if your lender forgives your mortgage debt in its entirety according to the terms outlined in The Mortgage Debt Relief Act of 2007. Also a short sale keeps a foreclosure off your credit record. Fannie Mae has reduced the mandatory waiting period to establish credit history after a short sale to 2 years. This waiting period after a short sale is lower than the required 5-7 years following a foreclosure.
In this continues drooping value market owners have to be ready to confront difficult decisions regarding their financial life when they need to move out, So  If you find yourself in this position, and you may begin to think that there is no way out of this mess and that you will have to foreclose on your home.
You do not have to take this drastic step.


Talk to your lender.  Most lenders will allow you (within reason) to rework the amount you owe or the monthly repayment amounts as it is the easy option for them to take.  If they were to take over the house, they will likely struggle to sell it and will probably get less for it than if they had someone continuing to pay the mortgage over a number of years.  Lenders appreciate honesty and constant communication from someone who house value has plummeted way below their mortgage value; it gives them more time to come to an agreement which helps the person continue to make their payments without defaulting.

Another viable option is to consider renting your home.  With people finding it hard to buy a home, the numbers of Americans looking to rent is growing by the day.  Rental fees are often more than what you are paying monthly on your mortgage so you could actually be making some money!  You could find somewhere pretty cheap to rent while you are renting out your own home to keep you going, and once the housing market recovers sufficiently you could then sell your house and make a tidy profit on it!

Short selling your home is one of the best ways of avoiding the prospect of having to foreclose.  If you find yourself unable to make the mortgage repayments at all, you could sell your house at less than market value.  You might think why the heck would I do that???  The simple answer is that your lender may be more acceptable to receiving a single sum of money and closing off the mortgage agreement rather than take legal ownership of the property through the courts and trying to sell it to recoup their losses.  If your lender does accept a short sale, you may be liable to pay the difference between the sale price and your outstanding balance on your mortgage.  However if you are in bad enough financial difficulties, the lender will not demand the difference in one go but will work out some sort of repayment plan with you.

Avoiding foreclosure is important as if you do foreclose on your home, it has long term implications.  It can serious damage your credit rating as it shows potential lenders that you were not able to maintain the most important financial commitment anyone will ever have.

Hopefully you will now see that there are options out there for you should you owe more on your mortgage than your house is actually worth!.



Carlos Caraballo


Global Realty Enterprise








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