Behind on Payments?
If you are behind on your mortgage, don’t feel bad. You’re not alone. In fact 36% of homes sold in metro Atlanta in 2010 were distressed sales. A distressed sale means these homes were sold as either a short sale or a foreclosure. In both instances, this means the homeowner was no longer making the payments on their mortgage, and most often, the value of the home was worth less than the amount the homeowner owed on it.
Foreclosures
There are two types of distressed properties: foreclosures and short sales. A foreclosure refers to a bank owned property. The homeowner is in default (missed payments), is notified of the foreclosure proceedings by the bank, and after a period of time the property goes for auction on the courthouse steps. Usually the home is not purchased and the bank regains possession of the property. At this point the bank hires a real estate agent to list the home, and it becomes available on the open market.
Reasons to Avoid Foreclosure
- You will always have to disclose that you have had a foreclosure on any mortgage application and many job applications in the future, and this can have an adverse affect on your future mortgage rates. This is the only credit item that is asked specifically on those applications.
- Credit scores can be lowered by 300+ points, and a foreclosure is the most devastating credit issue in relation to future credit availability.
- A foreclosure is the one credit report item that is almost impossible to have “repaired”.
- Your lender can seek a deficiency judgment against you and collect for any amount they do no recuperate at bank sale.
- Many employers run credit checks on prospective employees, and foreclosure is one of the top items that will put a potential new hire in jeopardy.
- Many current employers run credit checks, and a foreclosure can put a current position in jeopardy.
- Security clearance and government positions, including but not limited to military and law enforcement, can be jeopardized by a foreclosure.
Short Sales
Most people are familiar with the term ‘foreclosure’ and have a good idea of what it means. However, the term ‘short sale’ is new to most people, including many real estate agents. A homeowner is ‘short’ when he owes more on the property than the property is worth. A ‘short sale’ is when the homeowner’s mortgage company agrees to accept less than the full amount owed on the mortgage at closing. A buyer closes on the property, and the property is ‘sold short’. Click here to see an example.
A short sale is one of a few options potentially available to distressed homeowners as a way to avoid foreclosure, and in many cases, it is the best option. Fill out the form below and we will contact you to help you evaluate your options and help you decide which option is best for you.