Should you Short Sale?

If you're following the news, you've been hearing about the mortgage crisis in America.  Three factors have converged to create a difficult situation for many homeowners:

1)  The market spiraled out of control in '05 and '06 when many bought their homes at record-high prices.

2)  Buyers took ARM mortgages in order to afford the high-priced homes, with low starting rates which they could afford.  Now those rates are re-setting to higher, market rates, making the monthly payments too expensive, since wages have not risen dramatically.

3) Home prices have now begun to reduce to normal, affordable amounts - which is great for those in the market to buy right now, but difficult for those who bought when prices were high.  Now they may owe more than the home would sell for in today's market.

What should homeowners do in this situation?  First, know the terms of your mortgage.  Do you have a loan that will adjust?  If so, calculate what your new payment is likely to be, and begin putting money aside to carry you through those first tight months.  This will give you a buffer to make a sound decision when the time comes.

If your mortgage has already reset, and you are struggling, what are your options?

1) Refinance at a fixed rate - the best option if your credit is good and your home is still worth the amount you owe.

2) Work out a forbearance plan with the mortgage company - they may freeze the rates at the present level for a period of time, to allow the market value of the property to catch up to the loan value.

3) Short sale - if circumstances have caused your finances to bottom out - job loss, major medical costs, etc., the mortgage lender may allow you to sell the home for less than you owe.  You will lose any equity you may have built up, but the impact on your credit score will be less than for a foreclosure.

4) Foreclosure - the bank will foreclose if you do not pay your mortgage.  Act immediately to pursue one of the above options if you receive a foreclosure notice from the bank, as foreclosure is to be avoided if at all possible.

A Realtor can help you evaluate the best choice for your circumstances.  If you have already received notice from your bank, legal advice is highly recommended.  Be wary of people ready to ‘help' who have no professional licensing or credentials.  Some will take advantage of your predicament.

If you are in a tough situation, don't give up.  Call a real estate professional who understands these options and more.  There is a way out, and there are professionals ready and qualified to guide your journey. Learn the life lessons that come from the storms, and resolve to carry new wisdom into tomorrow.

For more information and an objective view of your situation, call Marsha Cleaveland at 623 337-8990. www.HomeKey.org.