2Posted by Chase Craig on July 23, 2011 at 11:01 am
Boise Real Estate – Short Sales: When is it ok to short sale?
I’m often asked this question. First, a short sale is selling a home for less than what is owed on the mortgage. Banks realize that short sales are more beneficial financially than foreclosures. As a result, the short sale process is significantly easier today than it has ever been. But what situations warrant a short sale? Any time you owe more on a home than what it is worth and you cannot afford the payments, it is ok to short sale a home. It is always better to short sale than it is to foreclose. Certain situations even allow you to do so without being late on mortgage payments (divorce, death, loss of job etc.). In those situations you may even be able to buy immediately after the sale of your home. If you or someone you know has a question about their particular situation, feel free to have them call or e-mail me today.
1Posted by Chase Craig on April 9, 2011 at 10:05 pm
Should I Short Sale or Foreclose on my Boise Home?
Before you read this, if you or someone that you know is considering a possible short sale or foreclosure on their home in Boise and want to find out what is possible or the best for their situation, please contact me and we’ll discuss it personally.
If you have been considering a short sale or even possibly foreclosing on your Boise home, you may be getting mixed advice from friends, family, google and colleagues alike. Today I will explain the about the difference between the two of them as well as the long-term effects on your credit.
Most of us know what foreclosing on a home means and entails. If you pay, you stay, if you don’t you won’t. The lender’s right to foreclose on your home is something that is agreed upon when obtaining a loan at the closing table; when you sign that mile high stack of gibberish called loan documents.
Some might not know exactly what a short sale means or how it works. For those who aren’t aware read about short sales, be sure to read about them at Boise Short Sales.
Let’s talk about how they affect your credit.
Foreclosures:
If you decide to foreclose on your home in Boise, you can expect your credit score to decline between 125-300 points depending on your particular situation. The credit bureau’s exact calculations are carefully guarded as they are the “secret sauce” that makes them different. There is no way to know exactly how much it will affect your score.
Having late mortgage payments is one of the biggest reasons for the dramatic decrease in your credit score. The actual foreclosure will show up on your credit report and public record for 10 years. It also has a direct impact on your credit score for over 3 years. With some companies pulling credit reports as part of their hiring process, this could have an even greater impact.
Short Sales:
There are many ways to conduct a short sale on your home in Boise. One of the myths that is out there is that you have to be late on your mortgage in order to short sale on your home. While it can make it easier to start the short sale process, it is not always necessary for you to miss your mortgage payments.
Let me say that again, as it is extremely important for you to know. It is NOT always necessary for you to miss your mortgage payments to short sale your home in Boise. This is one of the single biggest differences in how your credit is impacted vs. a foreclosure. You will need to work with your lender to negotiate the short sale without missing any payments.
Only late payments on your mortgage will show up on your credit report and after the home has been successfully sold, it will be reported as paid in full or negotiated. You can also work with your lender to negotiate “paid in full” as part of the terms for your short sale. Your credit score can be impacted as little as 50 points. Short sales are not reported on your credit history. There is no specific item reported as “short sale” as the loan is typically reported as paid in full, settled or negotiated.
How long until I can get a new loan to buy home in Boise?
Another big difference between short selling and foreclosing on your home, is how quickly you can buy a new home with traditional financing. Many people are seeking to take advantage of the great interest rates and pricing that the Boise area has to offer. If you are in a position where you need to sell your home and want to buy a new home in the Boise area as soon as possible it is imperative that you know how they impact your future purchasing power.
How long after a foreclosure?
A typical borrower will wait between 3 and 5 years after a foreclosure to obtain a new home loan. The kicker is that the clock does NOT start ticking until the sale date of the foreclosure. Meaning that if you are removed from your home on January 1st of 2012, but the bank takes 2 years to sell your home, the clock will start ticking January 1st of 2014. You will also be required to check yes on any future 1003 applications with a mortgage company which asks, “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?”. This will affect the interest rate you are offered from said lender.
How long after a short sale?
If you are able to perform a successful short sale, you will be eligible to receive a traditional home loan within 2 years of the date of the sale. For our purpose, a “sale” will be the date the home closes and title transfers.
The Bottom Line:
If you or someone you know is in a position where they have to sell their home for reasons beyond their control, it is ALWAYS better to short sale the home than to let the home go into foreclosure.
You can live in your home while performing the short sale process and have a significantly better opportunity to receive future loans. There is no cost to you to short sale your home, so give a Realtor like myself a call to find out what’s best for your scenario.
I’d love to hear from you. Please post any questions or comments that you may have and please subscribe to my blog for future posts regarding real estate education and local Boise real estate information.
1Posted by Chase Craig on April 4, 2011 at 10:03 pm
Boise Short Sales – Must know information if you are looking at Boise short sale or already in contract on one.
Alright so you have been considering Boise Short Sales or maybe you are already in contract on one…here are a few must know items…
Do not pay for an appraisal on the home until you have the bank or lien holders approval in writing.
Do not pay to have the home inspected until you have the bank or lien holders approval in writing.
Do not end your home search after submitting the initial offer.
The bottom line is that nothing is sacred in a short sale until the bank or lien holder gives you the approval in writing. That includes you getting the home. Just because you have an accepted offer on a Boise short sale does not mean that you will be able to purchase the home. For more information on Boise Short sales, click here.
Have you been looking at homes lately and noticed a few homes that were priced so good that it seemed to good to be true? I receive calls from friends and family on a regular basis about homes they have seen online or grabbed a flyer from that were priced so much lower and better then a lot of other homes on the market. Almost every single time I receive one of these phone calls or emails and do a little bit of research on the home it turns out to be a short sale.
What is a short sale? A short sale is what when the person selling the home owes more on the home then the price they are selling it for and they don’t have the means to pay the difference.
Example:
Homeowner “A” owes $200,000 on their Boise home. The current market value is $150,000. If they were to list and sell their Boise home at $150,000 they would be short of what is owed on the mortgage by $50,000. Therefore they would be performing a short sale on the Boise property and asking the bank to forgive the $50,000.
The problem with most short sales is that the real estate agent comes out to the property and acknowledges that the current market value is $150,000 but decides to list the property for $130,000. Why? The banks won’t start the short sale process until they have an accepted contract on that home. Hence, the agent wants to price the home so low that they get a lot of offers immediately to get the ball rolling with the bank.
Now that the bank has an offer it goes into the “stack”. The turn around time for a response from a bank on a short sale offer is anywhere from 30 days to as much as 9 months. What happens when the bank finally reviews the offer?
The bank now has a few different options.
1. They can decide to proceed forward with a foreclosure on the property depending on how much is owed and how late the buyers are with their payments.
2. They can send a local Boise real estate agent out to the property to perform a Broker’s Price Opinion or BPO. If this number comes in significantly higher then the actual sales price the bank will typically come back with a higher purchase price on your home. Yes you read that right…you could wait 90 days or longer just to hear that the price you thought was to good to be true actually was!
3. They can accept your offer and proceed as is.
Why do most buyers and Boise real estate agents avoid short sales? Because you can wait an average of 90 days to get a response on your offer from the bank and the bank can come back at a higher price or deny the short sale all together. If you are not worried about waiting 90 days to be back at square one then it might not be such a big deal for you. But if you are looking to purchase a home and close on it in a timely manner at a price you agree to up front with the seller that wont change, short sales are not for you!
Above is a quick video that explains the Boise short sale process for you visual people.
