Having Trouble Making Payments? Should you Consider a Short Sale?

With jobs and the economy struggling along, it's understandable that many homeowners are having a hard time making their mortgage payments these days.  You bought your dream home four years ago when financing was easy to come by and rising home prices were threatening to push the American dream beyond reach.  We all know what happened next.  A lot of very responsible , well intentioned people were caught in the middle of this crisis.

So, what do you do if your home is worth less than you owe on it and the monthly mortgage, tax and insurance bills are more than you can afford?  I will get right to the point.  You do notwant to leave the keys on the kitchen counter and walk away.  A foreclosure is going to do horrible things to your credit rating for the next seven years.  Poor credit will make it much harder to get your finances back on track.  If you play your cards right, you can rebuild your credit rating and even qualify to buy another home in a little as two years. 

Without good credit, you will pay more for cars, you may get denied the home you want to rent, you might have to pay cash for larger purchases like computers etc, you may even get passed over for the job you are applying for.  The ability to finance larger purchases at low interest rates is important if you want a high standard of living and do not have the ability to pay for everything in full up front..

Homeowners in this situation should first contact their lender to see if they will restructure their debt by reducing the interest rate or the loan balance to an affordable level.  If this does not work, the next best solution is a short sale.  When you sell your home and the proceeds are less than you owe the lender it is called a short sale.  Your lender must agree to a short sale and they do have requirements.  Most importantly, you must provide documented evidence of hardship and show that foreclosure is imminent.

The lender will not agree to taking a reduced payoff or short sale just because you owe more than the home is worth and want to walk away.   

If you qualify for a short sale, you can rebuild your finances, put this chapter behind you and have a good credit rating again in as little as two years.

If you own a home in Santa Barbara County and would like to discuss your options, contact me at (805) 757-1867 or RichBosselmann@gmail.com