by Phoebe Chongchua
It may truly be the choosing of the lesser of two evils -- short sale or foreclosure -- but, if you have to get out of your home, finding a way to complete a successful short sale may provide the best outcome for a distressed homeowner.
Since I've covered short sales in previous columns, see Short Sale: May be Solution for Delinquent Homeowners, I am not going to focus on what they are but rather how to make them successful. Short sales are typically more difficult than a regular real estate transaction but they are better than simply walking away from a home and letting it foreclose.
These days, with foreclosures and short sales comprising nearly 40 percent of recent home sales, the National Short Sale Center (NSSC) is receiving more than 3,000 calls per month from homeowners across the nation. The company has already handled more than 1,000 short sales in all 50 states.
Nearly 12 million homeowners are upside down with their mortgages -- owing more than their home's value -- and the number is growing. It's estimated that number will increase to 15 million within a year's time.
Travis Hamel Olsen and some partners opened the NSSC a few years ago. He says the short sale is a "win-win" situation. The bank ends up losing less money than if it ended up taking back the property and the homeowner's credit is not damaged as much as from a foreclosure.
But the short sale process is not easy or financially pain-free. Some lenders will absorb the difference between what the outstanding mortgage is and what the home sells for in a short sale. However, other times the lender will seek to collect the difference from the homeowner.
If you're considering a short sale, here are some tips that you should consider.
Get expert help.
This is a must. Short sales are difficult and negotiating through the process can be very stressful. You need guidance and the best available information that you can find. "There's no charge for our services to the homeowner," says Travis Hamel Olsen, President of National Short Sale Center. That's because the NSSC is paid by splitting commission with the listing agent and the lender pays the company a closing fee that is authorized by the homeowner. For those fees, the company will help the homeowner navigate through rocky waters. "We will guide the homeowners, letting them know all the documents that they need to collect for their specific lender," says Olsen.
Start the process as soon as possible.
Contrary to what some homeowners believe, you do not have to be delinquent to start or complete a short sale. "Don't sign title over to anybody else to conduct a short sale for you," cautions Olsen. He adds, "A lot of people will sign the deed of the property over to somebody to negotiate the property -- that's not needed."
Submit a hardship letter.
Even though you'll utilize the services of expert agents and short sale specialists, you'll still need to do your part to help convince the lender that the short sale is the best outcome for all. The hardship letter explains to the lender why it is impossible for you to pay the full amount of the loan. It demonstrates your true financial hardship. Experts say you have to be careful if there is a big gap between your current income and the income you used to get the initial loan to buy the property. A large gap could point toward possible mortgage fraud, unless your financial circumstances have drastically changed.
Price the short sale competitively.
Usually, it's best to price the property at or near market value. Keep it competitive says Olsen. He says a lot of people want to list the property at what the debt is but that is not usually successful. The good news is that Olsen says banks are more willing to negotiate. "We are seeing more approvals and consequently more closings every single month," says Olsen.
The short sale can be a lengthy process, have, patience, quality experts on your side, and stay on top of what is needed from you to help close the deal. For more information on short sales visit: shortsalecenter.com.
link to article
http://realtytimes.com/rtpages/20081219_shortsales.htm
Friday, December 19, 2008
Thursday, December 18, 2008
RATES ARE AT HISTORIC LOWS
Refinancing Booms as Rates Fall
According to the Zillow Mortgage Marketplace, consumers were being offered 30-year, fixed-rate mortgages for rates 5.25% on Monday. Zillow.com said that the average rate for 30-year FRMs offered on the Zillow Mortgage Marketplace dipped to 5.25% on Monday, Dec. 15. That is contributing to a spike in loan applications for refinancing. Refinancing during the first half of December was up 230% from the first half of November, Zillow.com said. Refinancing accounted for more than half of home loan applications in the December period.
Now is the time to speak to those buyers on the fence on purchasing a home. The purchase rates are in the low 5%, if not lower in some cases. The rates are at a 4.5 year low. Clients should be jumping to purchase homes with these rates.
Remember that with FHA loans the buyer can bring as little as 2.25% for a down payment. VA loans are set at 100% financing. NO MONEY DOWN loans exist for all vets.
Have them call me for a free, immediate qualification. I will send Realtors that pre-qual letter in 1 hour.
Refinancing is also available at 95% loan to value. Call for a quote.
Joe Phillips
386-615-7977
According to the Zillow Mortgage Marketplace, consumers were being offered 30-year, fixed-rate mortgages for rates 5.25% on Monday. Zillow.com said that the average rate for 30-year FRMs offered on the Zillow Mortgage Marketplace dipped to 5.25% on Monday, Dec. 15. That is contributing to a spike in loan applications for refinancing. Refinancing during the first half of December was up 230% from the first half of November, Zillow.com said. Refinancing accounted for more than half of home loan applications in the December period.
Now is the time to speak to those buyers on the fence on purchasing a home. The purchase rates are in the low 5%, if not lower in some cases. The rates are at a 4.5 year low. Clients should be jumping to purchase homes with these rates.
Remember that with FHA loans the buyer can bring as little as 2.25% for a down payment. VA loans are set at 100% financing. NO MONEY DOWN loans exist for all vets.
Have them call me for a free, immediate qualification. I will send Realtors that pre-qual letter in 1 hour.
Refinancing is also available at 95% loan to value. Call for a quote.
Joe Phillips
386-615-7977
Mortgage Applications Rise
Mortgage applications climbed last week in response to falling interest rates, according to the Mortgage Bankers Association weekly mortgage applications survey.
The index increased 2.9 percent to 841.4 from 817.7 the previous week on an adjusted basis. On an unadjusted basis, it also increased 2.9 percent and was up 37.3 percent compared with the same week a year ago.
Most of the activity was in refinances, which increased to 76.9 percent of the total.
"It doesn't solve the problem for people who owe more than their home is worth, but for the significant majority who are able to refinance, it is quite a boon," said Bob Walters, chief economist at Quicken Loans in Livonia, Mich.
Interest rates were down last week compared with the previous week, and are expected to decline still further in response to the Federal Reserve cutting its benchmark rate to a record low this week.
Last week’s already low rates continued to decline:
30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent;
15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent
1-year ARMs decreased to 6.63 percent from 6.76 percent.
Source: Mortgage Bankers Association and Reuters News, Lynn Adler (12/17/2008
The index increased 2.9 percent to 841.4 from 817.7 the previous week on an adjusted basis. On an unadjusted basis, it also increased 2.9 percent and was up 37.3 percent compared with the same week a year ago.
Most of the activity was in refinances, which increased to 76.9 percent of the total.
"It doesn't solve the problem for people who owe more than their home is worth, but for the significant majority who are able to refinance, it is quite a boon," said Bob Walters, chief economist at Quicken Loans in Livonia, Mich.
Interest rates were down last week compared with the previous week, and are expected to decline still further in response to the Federal Reserve cutting its benchmark rate to a record low this week.
Last week’s already low rates continued to decline:
30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent;
15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent
1-year ARMs decreased to 6.63 percent from 6.76 percent.
Source: Mortgage Bankers Association and Reuters News, Lynn Adler (12/17/2008
Key Interest Rate as low as it can go
The Federal Reserve on Tuesday lowered its benchmark federal funds rate to a range or zero to 0.25 percent and said it would likely keep rates low for an extended period.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said.
The Fed also said it was prepared to purchase more debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-sponsored mortgage agencies. And it said it is considering purchases of longer-term U.S. Treasury debt.
"The focus of the committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level," it said.
Michael Woolfolk, senior currency strategist, at the Bank of New York-Mellon, applauded the Fed’s approach. "We think it's the best possible move for the U.S.
consumer and for the financial market," Woolfolk said.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said.
The Fed also said it was prepared to purchase more debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-sponsored mortgage agencies. And it said it is considering purchases of longer-term U.S. Treasury debt.
"The focus of the committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level," it said.
Michael Woolfolk, senior currency strategist, at the Bank of New York-Mellon, applauded the Fed’s approach. "We think it's the best possible move for the U.S.
consumer and for the financial market," Woolfolk said.
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