We have clients who often ask us whether or not they should really seriously consider a short sale or just let their home go to foreclosure and just "walk away". For the most part, a real estate agent cannot play the role of an accountant as their are implications to both scenarios. We stongly urge all of our clients to communicate a legal and tax advisor before making any decisions with these. That said, we believe from the information we have gathered and the success that we have had with our clients that you are much better to successfully sell your home short rather than let it go to foreclosure. Here is a list of items that will help you understand some of the issues and current guidelines under both scenarios.
Issue - Can I get a Fannie Mae Loan in the Future?
Foreclosure - The current Fannie Mae Guidelines require you to wait 5-7 years before getting a new loan.
Short Sale - Current Fannie Mae Guidelines allow you to purchase another house after 2 years.
Issue - Can I get a future loan from any mortgage company?
Foreclosure - Any future application will require you to answer the question, "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" you'll have to answer that question yes.
Short Sale - You can state No because you short sold your home. You only have to say yes if the bank completes the foreclosure.
Issue - Credit Score Impact
Foreclosure - Your score is typically lowered by 250 to 300 points, or even more. This often stays on your credit score for over 3 years.
Short Sale - Only late payments show up. After a short sale, the mortgage is normally reported as "paid in full, settled." This lowers your score as little as 50 points if all other payments are being made. Oftentimes, this is off your credit report in as little as 12 months.
Issue - Will I owe the bank any money for the shortfall?
Foreclosure - Many lenders take 12-18 months to foreclose upon a property and resell it. This dramatically increases the loss and makes any deficiency judgment potentially bigger.
Short Sale - Few lenders ask for a promissory note on a short sale. When they do ask for one, they request the borrower repay them a percentage of their loss and can schedule to have that paid off under a long term schedule with no interest.
We hope this can open your eyes a little bit. We understand the stress that people are faced these days with the possibility of a foreclosure and most people just become paralyzed and dont do anything. We strongly suggest speaking with a seasoned/experiences short sale agent who has a system in place to make the possibility a reality. Do not just use any agent. Make sure you know they have had success with other clients.
We at HotSpot Real Estate, have a short sale system in place with a dedicated negotiation team to work with our clients that are faced with this possibility. If you are in this position, please contact us to discuss your options. Everything is 100% confidential and you are never obligated to do anything.
You can either call us at 720.488.4810 or go to http://www.hotspotrealestate.com/denver_short_sale_negotiators.htm
You can rebound from a short sale so please dont wait to contact us.
About Me
- Denver Real Estate
- Hello - My name is Mike Baker and I am a Denver Realtor and have been practicing real estate in the Denver metro area since 1999. I am posting my blog to provide information to the general public about the changing aspects of real estate and most importantly how it is affecting the local Denver real estate market. If you have any questions or thoughts please dont hesitate to comment on my blog. Also, I am always willing to provide services such as: FREE home evaluations if you are thinking about selling your current property or FREE lists of properties to buyers who are just starting to look (not only market rate but bank/foreclosed options). Let me know how I can help. You can contact me at info@hotspotrealestate.com or visit http://www.hotspotrealestate.com and use some of the search tools such as: map search, search by master planned community, neighborhood information and much more... Good Living, Mike Baker
Tuesday, January 25, 2011
Wednesday, January 12, 2011
7 Reasons to Own a Home
1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.
2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.
3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.
6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.
7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity
2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.
3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.
6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.
7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity
Wednesday, January 5, 2011
Denver is Nations 6th Best City for Business
The Denver Business Journal recently reported that Market Watch has ranked Denver as the nations 6th best city for business out of 102 major metro areas.
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