Short Sales: A Viable Alternative to Foreclosure
By John Voket
One of the things we hope to see less of in 2012 is short sales.
This brings me to a blog by Bion Grady, (bionsellshomes.com) who specializes in loan modification assistance and short sales in Paulding County, Ga. Grady says if the only alternative for distressed homeowners is to walk away from their property, a short sale may still be a viable alternative for a number of reasons .
Grady advises homeowners to remember these four things:
1. Debt Eraser. The upside down debt is erased in most cases. If you are selling because of a financial hardship, then the upside down debt will be automatically erased in most cases. If your loan is owned or insured by Fannie Mae, Freddie Mac, FHA, and/or VA, and you are short selling because of a financial hardship, their policies state that your debt will be erased.
2. Faster Rebound. You are eligible to buy another home much sooner compared to a foreclosure. The most common loan program, Fannie Mae, stipulates that you can buy another home under their program in two years. FHA, a popular low down payment loan program stipulates that you can qualify for an FHA loan within three years.
3. No Cost to You. According to Grady, all of the expenses are paid for by your lender. That includes the title insurance, any county taxes or fees on the sale, attorney fees, and the real estate agent. If the lender foreclosed on the house and then tried to sell it, they would have to pay all the costs.
4. Less Credit Damage. Upon completion of the short sale, Grady says your credit score will drop between 50 and 100 points. However, it will rebound fairly quickly, and you will have a lower debt to income ratio, which will boost your credit. In addition, anything and everything bad on your credit can be fixed through the dispute process.