Short Sale
Short sale is becoming a very popular field
in real estate especially when interest rates are climbing.
Many homeowners took advantage of the low interest rates over
the past few years. They refinanced, cashing out on the equity
on their homes. Now that the interest rates are rising and
remain high, the homeowners are stuck with high interest rates
on their mortgages. Since the housing market in most states are
slowing down, they can not sell their homes for the high value
they once could to pay off their mortgages and move into a
different house that they can afford. For these homeowners, a
short sale is their saviour.
How can a short sale help the
homeowners?
Let's examine the options available to the
homeowner when the homeowner owes the bank more than his or her
home is worth:
-
The homeowner can sell his or her home on the
market by either listing with a realtor or do it
for sale by owner. However, if he or she lists with
a realtor, he or she will have to pay for various
things such as:
-
realtor's fees
-
cleaning and making the house presentable
for showing
-
mortgage payments and other bills during
the time the house is on the market and has
not sold yet
-
cost of fixing and repairing broken parts
of the house
-
moving cost
-
cost of next accommodation
-
the different between the mortgage balance
and the proceeds from sale of the home
(note that selling through a realtor means
your final check is less due to realtor's
fees)
-
If the homeowner does not put his or her home on
the market, he or she can try to negotiate with the
bank himself or herself. Usually the bank will try
to accommodate payment plans where the homeowner
can skip a payment or two and adding them onto the
mortgage in the back end. However, if the
homeowner's situation doesn't change, he or she
will not be able to afford the next payment which
means this only delays the inevitable. If the
homeowner cannot make future payments, then the
home will go to foreclosure.
-
The homeowner can go through the foreclosure
process but this is embarrassing and bad for his or
her credit.
-
The homeowner can also file bankruptcy, but this
again is not too appealing.
-
Or, the homeowner can try a short sale. We discuss
the benefits of a short sale in later parts of this
Short Sale website.
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