5 Short Sale Frequently Asked Questions

Short sales are complicated and many short sale transactions fail. According to some estimates, 49.4% of short sales fail, compared with 17.9% for foreclosures and 13.1% for traditional sales. Yet there are benefits to having a short sale as opposed to foreclosure or deed in lieu where the bank recovers your house.

First, short sale is a way to avoid the stigma of foreclosure. Also, by going through a short sale, sellers can avoid to come up with thousands of dollars to make up for the difference they owe on mortgage. That is, federal government aids facilitate the lender forgiving the balance on the loan for a short sale seller.

Are you considering a short sale? Here are the five short sale frequently asked questions and their answers.

  1. Can any real estate agent handle a short sale?

No. As mentioned above, short sales are complicated. More than any other real estate transactions, you need a qualified professional. You need an agent who has successfully completed many short sale transactions, someone who is a very good negotiator. Not all real estate agents are qualified to handle the complex short sale process.

  1. Why should I choose short sale over foreclosure?

In many cases, a short sale is more beneficial than a foreclosure. And it’s not only about your credit but foreclosure can bring with it a social stigma which you will want to avoid. Here are the perks of short sale over foreclosure:

  • Short sale will affect your credit. But the effects of foreclosure on credit lingers more than that of short sale. Also with short sales, you will be presented with more options whenever you want to reenter the market.
  • You are in control of the sale, not the bank. You can sell your house to whomever you wish to sell it to.
  • Depending on tax laws in your area and your circumstances, banks will forego the balance you’re supposed to pay after selling your house in a short sale.
  1. How do I know if I qualify for short sale?

Basically, to qualify for short sale, you need to fulfill the following conditions:

  • You owe more on your mortgage than your home is worth
  • You’re willing to sell
  • You have a financial hardship that’s making it hard to make payments

These are the basics. You need to speak with an attorney or real estate agent to know what applies in your area.

  1. Will I get any money from the sale?

Since the lender is the one taking a loss, don’t expect to get anything from the sale unless specifically authorized by federal programs such as HAFA.

  1. How long do short sales take?

This is probably the most common of the short sale frequently asked questions. Short sales require great deal of patience. It can take weeks, maybe even months. And it’s important you work with a realtor who has completed many deals and knows the bank’s requirements. Also, you should be ready to present any required document on time.

 

Recovering From a Short Sale

Borrowers owing more than the worth of their homes have the opportunity of getting out from under. They are allowed to negotiate a short sale with their lender. However, short-sellers are often regarded as higher-risk borrowers. As a result of this, they find it hard to secure new loans.

What is a short sale? A short sale is a situation whereby a lender comes to an agreement to accept less than what is owed on a property. This will provide the borrower with the opportunity of walking away. Foreclosure can also be avoided in the process. As a result of this, a minimum amount of time exists before the short-seller is allowed to take another loan.

On the off chance that keeping your home is not even an option at all, a short sale makes it possible for you to escape the disturbing penalties connected with a foreclosure. In a short sale, the lender comes to an agreement, allowing you to sell the property or home for quite less than the amount owed.

Even though your liability has been released, your credit score will definitely be affected. The good thing about a short sale is that the effect on your credit score is not as severe when compared with a foreclosure. Notwithstanding, your score will still be lowered. It will likewise be on your report for nothing less than seven years.

This is just a minor setback. There is always a way out. It is still very possible for you to recover from a short sale and even turn into a homeowner once again. Some of the ways you can recover from a short sale include:

  • Secure a stable housing

You may be required to wait for at least a couple of years before you are qualified to apply for a mortgage loan once again. Secure a stable housing by renting another home or by staying with any of your relatives for the time being. If you plan to rent, you may be asked to pay a higher security deposit due to the short sale on your credit report.

  • Pay your bills on time

Setting your bills right on time, or as soon as you can also help in improving your credit score. Try as much as possible to keep your current accounts in a good state. This will lessen the short sale’s effect your credit history. Even though there is a variation in the particular amount of points a short sale will lower your credit score, however, someone with a couple of blemishes will feel a large drop as compared to an individual having a perfect credit.

  • Get a secured credit card

Obtaining a secured credit card makes it possible to re-establish your credit in case you do not possess loans or credit cards. Remember to set the spending limit with on your secured credit card. Also, your available credit limit must be equal to the deposit being paid. This deposit will be used as a collateral in case you default. It isn’t applied towards your balance.

  • Lower your debt-to-income ratio

Paying down your auto loans and credit card balances is a good way to lower your debt-to-income ratio. If buying a house is in your plans again, the lender is going to assess your debt with respect to your monthly income.

  • Save up a down payment

Lastly, try as much as possible to save up a down payment. With a down payment of about 20 percent or even more, you are able to cut down Fannie Mae’s time-wait penalty to two years from the actual seven.

All the aforementioned at things you can do to recover from a short sale.

Top 5 Reasons You May Need To List Your Home

Real estate stats have always shown home sales rising during summer and spring but dwindling during winter and autumn months. If you’re still on the fence about listing your home before the winter months, you may need to act fast because of the following reasons:
  1. Equity advantage

Due to recent market upswings in the Virginia real estate market, your home already has more value. It’s time to take advantage of the gains in equity and list your home now.

  1. Your house is too small

You’ve grossly outgrown your present home — either you had two more kids or an older parent has shifted in. If you are in a home that’s too small for your immediate (and future) needs, this is the time to consider the jump to something somewhat larger. Sale prices are solid, and you could take advantage of current interest levels before they start climbing.

  1. Incredible shrinking family

Empty nesters need to consider downsizing. It’s not fun to have to manage a big house with all its daily responsibilities, cleaning and maintenance. Downsizing now will mean less stress and a better lifestyle.

  1. Interest rates could start a fire

Interest rates are going nowhere but up, so if you are wondering when could be the best time to get a good mortgage rate on a new home?, the answer is now. Rates are currently at historic lows and are not likely to go anywhere but north in the foreseeable future. Sell now, buy and get these low rates for the long term.

  1. Sell if you want to, don’t run after the market

Not ready? Don’t rush it. If you are dealing with job change, divorce, children, medical issues, marriage, etc., and you should sell your present home right now (or don’t have enough time or energy to really get your home in market-ready condition), don’t make an effort to chase the market, run at your own pace.

However, the market still determines your real estate experience. If prices are high, you buy high and you sell high. So, you still need to consider the market whenever you do decide to sell. The bottom line is, list your house when you need to, price it right and move on.

 

Selling My House in Virginia: 3 Things Homebuyers Will Not Overlook

Marketers of any kind of product know how important it is to understand the needs of their clients. The needs could be generic or specific depending on the type of product. Looking at a home as a product, you’ll understand that buyers of different age groups seek different things in a home.

For example, millenials do not really consider size of rooms when buying a home, but multi-functionality, while boomers prefer size. However, there are some common things that all buyers, no matter the age bracket want. Hence, to sell my house in Virginia, I’ll not overlook the following:

  1. Storage. When looking to avoid under-marketing, keep this at heart: showcasing your home in its best light is not simply about what you like about it. You may currently have outgrown the area, and began to see its imperfections more than its finer items: that is why you’re moving. However the goal of good marketing is to focus on things that allows your home to glow in the eye of your buyers and against your competition and one of this is a large storage space.
  2. Energy. Many buyers are drawn to the budget-friendliness of energy-efficient features of the less extreme variety. So, if your property is a fairly no-frills property but has a tankless hot water heater, dual-paned house windows and new insulation, talk about it! If you have got your energy charges down way below what’s normal locally, this is a feature you do not want to forget about; your agent can help you understand how to pass this information to buyers.
  3. Proximity. You may think the right buyers for your home will find it online just because of where it is located, so it is ridiculous to advertise the proximity of the property to amenities and attractions. Not the case. All buyers want a house that’s close to amenities and also easily accessible, but not everyone will have the time or know-how to do a zip-code search.

Your house may be a gem in this respect, but your buyer wouldn’t know this if you didn’t mention it. Also, your prospective buyer could look at all the houses in the city in their price range, but the fact that yours is off by an employer or a major university could push yours on top of the list.

Is Your Adjustable Rate Mortgage Giving You a Rough Ride?

Mortgage uncertainties are currently the order of the day for homeowners as speculations have arisen that mortgage rates are likely going up while others believe they’re coming even lower. For many defaulting homeowners, 2009 offered the saving grace with base rates which many homeowners found favorable. But this is changing with recent base rate increases. How does this concern adjustable rate mortgages?

Some years back, adjustable rate mortgages were even more common than fixed rate mortgages and this was easy to understand as they came with lower interest rates. Hence many people got the big houses, spurred on by the low interest rates offered by adjustable rate mortgages. It was a sweet deal, you could even take more cash out of your home.

But then there was the recession which stopped many homeowners dead in their tracks, as home values plummeted and many who couldn’t afford their mortgages tried to refinance but couldn’t. There was no way for them to refinance with the decreasing value of their real estate. During this time, many people lost their homes to foreclosure.

ARMs

Originally, the ARM was designed to help people with short term needs. It was a loan designed for anyone who wanted a mortgage just for the short term. The low interest rates spurred on a refinance boom in the 90s that saw many homeowners applying for adjustable rate mortgages.

ARMs will not profit an average American in the long run. In fact the main reason for most mortgage companies pushing these loans is that they are a sure way to get the business of its customers once the fixed rate expires in a few years.

After the introductory period, the interest is set in line with the market index. When the index falls, your interest does too. And a lesser rate means less payment, which is very good news for you. However, as the market index rises, so does your interest rate. And this could increment your monthly payment, making the adjustable-rate loan higher risk than other alternatives.

Interest Rates & Inflation

Interest rates are determined by many factors. But one of the most important is inflation. Inflation determines how high or low your mortgage payments become. The value of the dollar determines how much you pay on your mortgage.

It is proximately infeasible to estimate inflation in advance since it responds to many market factors. However, in the long run, inflation tends to go up over time. Variable rate loans will see higher interest levels when inflation is higher. Unfortunately, interest levels almost never drops when inflation goes down.

A wise thing you can do to safeguard yourself when chosing an ARM is to set how high your interest rate can go. You are able to set the limit on your interest rate increases. You can set the limit at a certain amount over your initial rate or use the prime lending rate, which adjusts itself with inflation to set the limit on your interest rate.

People who apply for ARMs often do so in hopes that the following will occur:

  • They’ll sell the house before the reset of the loan.
  • Their income will increase before the reset of the loan.
  • They will be able to refinance before the reset of the loan.
  • Interest rates will remain stable or decline, giving them a similar rate to the rate of introduction when resetting the loan.

But the market is simply not predictable and things can turn out not as expected. For many homeowners who took these types of loans during the market crash, the ten year locks are expiring and there is no way out, except refinancing or doing a short sale.

If you’re stuck with an ARM loan with increasing obligations, your lender recognizes it’s a matter of the time before you default. This costs them money and income and keeping you at home can help them and also you at the same time.

When you have been a good paying customer it’s likely that they will modify your loan to a fixed rate mortgage loan and renegotiate your interest with you to be able to help you stay put in your home. If you are still struggling to refinance your loan and you’re struggling to pay up, then you might need to do a short sale.

How To Get An Ocwen Loan Modification In 30 Days Or Less

The “loan modification” is a restructuring of mortgage payment, specifically with regard to the reduction of principal and interest on the interest rate, with the aim of getting an affordable monthly mortgage payment on the basis of your current financial status.

Essentially, at the end of a successful mortgage modification, your payments will be considerably lower, and restructured mortgage will allow you to remap your finances more effectively for yourself.

There are 3 major issues you should be aware of that the majority of homeowners encounter when attempting a mortgage modification and they are generally as follows:

  1. Qualifying-hardship: Hardships could include loss of employment, death of other half, job relocation, disability. You need to demonstrate that based on the new terms of your loan that you do have the ability to pay it.
  2. Documentation:  The most difficult part of the process according to many people is the continued request for documents, often submitted on short request. The documentation is essential to determining the loan modification; all documentation is definitely time sensitive and so, a missing pay-stub may possibly delay or dismiss your modification request.
  3. Modification: The modification itself can be very arduous if the homeowner is acting on their own behalf; there are no promises or guarantee you will receive a modification; (an affordable intermediary may be indispensable).

Ocwen Financial is approved by the Ministry of Finance to streamline loan modification approvals for homeowners who meet the basic eligibility requirements. If you run into problems with your mortgage payments, you have no time to lose.

The first step to this streamlined loan modification plan is to pass a short questionnaire. If you can answer yes to these rudimental queries, then you can move onto submitting your application. Do you:

  • Live in the home as your primary residence?
  • Have a mortgage payment that equals more than 31% of your gross earnings (ascertain to include your property taxes, homeowners insurance and any homeowner dues in your calculation)
  • Face a financial hardship due to less income and/or more preponderant expenses?
  • Have a mortgage that was taken out before January 1, 2016 and is less than $729,750?

In the event that you passed those inquiries, then you are onto step 2 of the streamlined loan modification program. The next thing is essentially completing the paperwork and offering proof your income. That’s where it gets serious-remember that the info you provide to Ocwen will determine whether you qualify or not. This is why it is so vital that you learn about how precisely to complete the application properly in order that you meet the rules and get that speedy approval.

Take a couple of hours to learn about the Ocwen loan modification process. Understanding how to make the necessary adjustments to the application can make the difference between success and failure.

Here are seven tips that can help you get an answer to your loan modification request in just 30 days or less:

  1. Loan number at the top of each page

When preparing your application, make sure that on all pages of your application, your loan number is clearly stated at the top of every page, including all of the documents you submit with your application. And only submit a complete application.

  1. Be Proactive When Your mortgage Is Being Transferred

If your loan is transferring to Ocwen Bank loan Servicing or from Ocwen to another financial loan servicer, you might want to be proactive as a way to attempt to escalate your overview. You should uncover if there is any way to get your review escalated with the recent servicer just before your mortgage is transferred.

  1. Determine your MTI and DTI

If your debt to income ratio is negative compared to your total monthly gross income (before taxes) or total monthly net income (after taxes), you could be at risk of a denial. Calculate your mortgage income (MTI) and debt to income ratio (DTI) before applying. You should ask questions about your potential qualifications with your Ocwen Customer Relationship Supervisor or an educated consultant.

  1. Determine Your Sources of Income

Your sources of income and banks statements will help to support your request for mortgage assistance. Self-employment income is one of the most arduous to present. Contributing income needs to be considered predicated on eligibility and the contributors participation in your monthly housing expenses.

  1. Gross Up Social Security Income

If you are using the social security income in your application, you need to perform a gross-up calculations for social security income. Your social security income is usually given to you with your taxes already deducted by the IRS, so you need to figure out what your gross social security income before applying. You should do a Gross up Calculation. By determining your gross Social Security income, you will better understand your current mortgage to income ratio, so you can better understand your options.

  1. Cut unnecessary expenses

Your bank statements clearly show your spending habits. If you present your monthly expenses to the lender on their financial worksheet, but your bank statements show something else, your request for assistance may be refused. If your financial problems is over, and you’re able to start making payments, you should start to save on your monthly mortgage payment. You should at least save a monthly payment you can afford.

  1. Planning Your Options In Case A Mod Is Not An Option

Ocwen may tell you to just apply and they’ll see what happens, but you will either be eligible for help or you are not. You must understand your qualifications before you apply. When you can prepare your application predicated on potential guidelines you may well be in a position to better present the application to Ocwen.

In many cases, you may only have the ability to re-apply if your situation changes after a denial. If you plan ahead you have an improved chance to complete the review of all your options. As the foreclosure procedure progresses, your options might become limited.

Getting through this review process fast can make you considered for other options as well, such as an Ocwen short sale or deed in lieu.

Tips To Keep You Sane During the Short Sale Process

It’s no news that the short sale process can be a long process. Many buyers at this time get tired of waiting and would threaten to cancel if they do not get answers within a specified time. This doesn’t help matters and doesn’t help make the process simpler or faster.

Following is a standard short sale process with the bank:

  • Bank acknowledges receipt of your file. This can take 10 days up to a month.
  • A negotiator is assigned. This can take a week to thirty days.
  • A BPO is ordered. The bank probably will refuse to share the BPO results.
  • A second negotiator can be assigned. This can take another four week period.
  • The file is usually sent for review or to the PSA. This can take 2 weeks to 30 days.
  • The bank will then request that all parties sign an Arm’s-Length Affidavit.
  • The bank issues a short sale approval letter.

Buyers get mad and annoyed because the short sale process is generally so lengthy they will sometimes cancel without telling anyone, much less the vendor. Some short sales get approval in 2 to 8 weeks while others can take 90 to 120 days, on average

Banks are losing cash in a short sale and aren’t really enthusiastic about it. It’s justifiable. Envision that you advanced a companion $100, and he came to you later saying he could just pay you back $75. Would you cave in easily? Most likely not.

In fact, everybody knows that it can and virtually certainly will take orders of magnitude longer than the average 30 to 60 days until you sign on the dotted line and the nightmare ends. And yet, that is exactly what the buyer will put in the contract – a deadline of 30 to 60 days.

Your bank, of course, will completely ignore this date, they do not care if you want to keep a buyer. The ball is in their court, and they get to call the shots. They will whenever they are ready – they are busy with other people just like you – and not any moment sooner.

It’s important to understand that a buyer and their agent haven’t any control over the procedure. The success of a short sale — and how long the short sale takes — relies intensely on the listing agent. If the listing agent isn’t familiar with short sales, you’re very likely wasting your time. An excellent short sales listing agent will effectively advise the homeowner and have an intensive knowledge of the lender and their particular processes.

During this time, it is rather likely you are feeling bored or unhappy looking forward to the short sale approval. It’s normal to experience a wide range of emotions during the process, from elation (finding the right house or opportunity) to frustration (when in God’s name am I going to get a short sale approval) to dejection (probably not meant to be). But no matter how justified your feelings, you aren’t doing yourself any favors when you let them get the best of you. This isn’t to suggest that you would think of sobbing on the phone to your agent, but don’t underestimate how even subtle exhibits of emotions like frustration or impatience can shine through during your communications with agents and lenders. Here are some tips to keep lucid during the short sale process:

  1. Don’t put your life on hold.

Don’t lose sight of the personal goals during the waiting process. Don’t stop authoring, blogging, reading, working out, eating healthy, studying, making music, painting or any program you already take part in! Sticking with your goals will help make the wait much more worth it.

  1. Stay positive.

Find a way to stay positive during this period, while talking to your agent, lender or buyer. This makes them more enthusiastic about the process too. Positivity is contagious. A good way to stay positive is to keep yourself busy, make improvements in other areas of your life.

  1. Do not hound your broker or home loan expert … as much as you want.

Keep your phone out of sight when you should be focused. Chances are the lender won’t come to a decision early on. If you don’t understand something linked to the process, call your agent or mortgage banker certainly, but don’t keep contacting for a decision on the short sale from your own real estate agent. Whether you become close friends after expending hours on the telephone or not- your agent can not work for the lender, and really you’re simply using up your daytime minutes.

When awaiting the short sale approval, it’s important that you focus on other things than just waiting on short sale approval. Focus on what life will be like after the short sale is complete. Sellers should focus on finding a place to live after the short sale is done, saving money and getting their finances in order.

Unfortunately, waiting is a part of the short sale process. Do not let it stress you out or make you think your short sale will be denied. It is not unusual for months to pass by without a solid solution. In the meantime, you will submit paperwork and resubmit several times. Do not let this part of the process put you down, it’s just part of the short sale experience.

Here are some things to keep you busy while waiting for short sale approval:

  • Become a Guitar God in 90 days – Easy and free guitar lessons.
  • Take the 365 challenge. Make something every day and “kick start your creativity.”
  • Working out.
  • Write a novel.
  • Meditate, daydream, lying in the grass and watch the clouds
  • Write a book
  • Make 60 paintings in 60 days
  • Gain 20 pounds of muscle in 60 days
  • Go from Couch to 5K in 60 days
  • Take and pass the GMAT
  • Learn a language
  • Practice Yoga everyday
  • Sign up for cooking classes
  • Try 30 rolls of sandwiches

During this time; the point is; make every effort to improve yourself. Become better at your job, you can work out to become better physically, this will yield better returns for you after the long 90 days of the short sale approval process.