5 Things You Must Do to Complete a Short Sale

5 Things You Must Do to Complete a Short Sale

Hopefully this topic won’t be so relevant soon, but for now it is still a big issue for many people. I have helped several homeowners through this difficult process over the last couple of years. Some short sales closed relatively smoothly – others didn’t work out so well.

Here are 5 important ideas to take away from my experiences:

 1) Find an experienced Realtor to list your house. Not just any experienced Realtor, but one that has successfully closed short sale deals. If you can find one that has closed a short sale with your mortgage lender – that would be best. This can be a complicated and frustrating process. You’ll want an agent who has been through this before.

2) Put together your hardship package. Your lender is going to require current income and asset documentation (paystubs, bank statements, etc.). A valuation of your property will also be ordered. You must also write a hardship letter, detailing the circumstances that brought the need for a short sale. Don’t hold back. Tell the truth, no matter how difficult or embarrassing this might be for you. Believe it or not, lenders are not all cold and callous. There are real people on the other end, and they do understand. Here are examples that might qualify as a hardship:

• Unemployment

• Reduced income (furloughs, new job, partner’s loss of job, pay cut)

• Illness or medical emergency

• Job transfer (voluntary or involuntary)

• Divorce, separation or marital difficulties

• Exotic mortgage terms (an adjustable-rate loan)

• Military service

• Death in the family

• Incarceration

• Increased expenses and excessive debt

• Unexpected repairs or home maintenance

3) Locate your lender’s Loss Mitigation Department (workout department). This is extremely important! Do NOT call the loan officer that closed your loan. The friendly customer service rep that answers the bank’s 800# likely won’t know. You must find the office that handles Loss Mitigation (short sales, foreclosures, etc.) for your region. These are the people you need to talk with. They are the ones that handle short sales.

4) Be Proactive. Once you are working with someone in your lender’s Loss Mitigation Department, call persistently to follow up. Be polite – but be persistent. Also, be prepared to explain your scenario over and over again. Your lender might have several people working as a team, and each one might be hearing your story for the first time.

5) Be Patient. I know this is easier said than done. The short sale process can take several months. There is a lot of work that goes into closing a short sale deal. Work patiently with your agent and your lender. Have a mindset of cooperation, even if your lender challenges you or information you send them. Work through it, and focus on the end result of selling your house.

Have you worked on or through a short sale?  Please comment if you have anything to add.

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House Hunting This Weekend? Take These With You…

The weekend is here!  Time to gas up the car, meet our Realtor, and view some homes.

But first, be sure to grab these two items before you leave:

1) House Hunting Detail List

You are likely to tour several homes during your buying process.  Keeping the details of each property straight in your mind can be difficult.  Take a sheet of paper and list all of the relevant details about the property, neighborhood, and work that needs to be done.

Better yet, contact me, and I’ll send you a detail list to use.

2) Digital Camera

What color was the bathroom tile at 123 Main St?  Did Bayview Pl have an un-obstructed water view?  Or was that Seaside Ave?

When you are looking at many homes, it is easy to have the details blend together.  Take a digital camera or smart phone to snap photos of all important features of the properties.  Also, take pictures of any areas that might require repairs & upgrading.  This will really aid in your discussions and thinking process afterwards…

Happy Hunting!

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Photos Ranked # 1 Tool

A picture is worth a thousand words. It could also be worth a few hundred thousand dollars! If you are listing your house for sale, make sure to include clear photos that show off the attractive parts of your property. Many buyers (myself included) skip over listings that don’t have pics or poorly taken shots of the house…

Annapolis Homes Info

Did You Know?Information Buyers Find Very Useful to Their Purchasing Decision

Buyers ranked photos #1 as the most useful tool in their buying decision. *

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Pre-Qualification vs. Pre-Approval, What’s the Difference?

Pre-Qualification vs. Pre-Approval

These lending terms have been thrown around loosely (often interchanged), and have caused some confusion among home buyers and Realtors.

The term Pre-Qualification typically describes a conversation held between a potential borrower and a mortgage loan originator. This conversation might include a discussion of credit, income and possible assets of the applicant.

Under this scenario, the information is probably not being verified with documentation or research of any kind. During this initial stage, an idea or “ballpark figure” of what the potential applicant might qualify for could be discussed.

Serious buyers know that in order to have their offers considered, they’ll need to be submitted with a real Pre-Approval Letter. Most loan originators (myself included) will not issue a Pre-Approval Letter without examining the borrower’s credit report, income documentation, and any liquid assets available.

The Pre-Approval goes one step further. The loan originator will calculate (based upon documentation supplied by the borrower) the maximum loan amount for which the borrower would qualify.

You can see a sample letter here.

The Pre-Approval Letter is then written to illustrate the borrowing power of the potential buyer. This is extremely helpful when submitting offers, as it gives the seller confidence that the buyer’s deal will not fall through (due to financing).

I have personally been a part of deals that were accepted because my borrower’s offer included a Pre-Approval Letter.

It should be noted that neither a Pre-Qualification nor a Pre-Approval Letter is a commitment from a lender. The loan (and its approval) would still be subject to underwriting, verifications, and the appraisal of the subject property.

Please feel free to comment on or share this post!

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Good post here!

I have purchased and sold homes, and would not have done as well on my own. Realtors can help you in many different ways including: contract negotiation, market analysis, property location & search….the list is enormous.

Buying or selling is a big project, and the help of a good Realtor can make all the difference.

Homesbyjim Real Estate

Survey Reveals Success of REALTORS® vs. FSBOs | Realtor Magazine.

 

This is a follow up to a previous post. The key is to get the home sold in the shortest possible time. Using a Realtor gives you the edge.

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What Are The 4 C’s of Mortgage Lending?

And you just thought the 4 C’s were for diamonds!

The mortgage industry has it’s own version, and these 4 C’s determine whether or not there is a loan to be made.

Since the financial meltdown a few years ago, lenders have gone back to these little C’s in a much stricter fashion.  Check out the video below to see what they are….

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Leave Your Credit Card Account Open, Huh?

Once I have my credit card paid off, I should just close out the account, right? This is an interesting question, and one that causes a lot of confusion for consumers.

It just makes logical, intuitive sense to close an account after I’ve paid it off. In fact, getting rid of that nasty old debt account will probably improve my credit score….

Debt is bad. Pay off debt. Close account. Debt is gone. Cool!

Not so fast! It may surprise you to know that closing that credit card account, that you spent months or years paying off, will probably ding your credit score.

I can hear you scratching your head right now.

Here’s how it works.

One of the factors that influences your credit score is the proportion of your credit line used. For more on the factors that influence your credit score, see my previous post here.

When you open a line of credit (i.e. credit card) you now have that line (whatever the amount) available to you. As you use it up, by making purchases, you increase the proportion of the line used and decrease the amount of credit available to you (bad).

100% of your available credit used = Maxed Out (very bad)

When you begin to pay down your credit card debt, your balance decreases, and your available credit increases (good).

When your balance reaches $0, you have the maximum amount of available credit possible (super).

If you then closed the account, you would lose all of that available credit.  Available credit – that is not being used – will help your credit score.

So, paying down your balances to $0 will help your score, while closing your account could actually hurt.

Questions? Comments? Leave some here.

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Quick Post – Home Buying Tip

Get Pre Approved for a mortgage before you call a Realtor and start shopping for your dream home.

Many people start by contacting a Realtor and looking at properties.  This is fine if you are a cash buyer.  But if you’ll require a mortgage to purchase, then speaking with a Mortgage Professional should be your first move.

A good Mortgage Professional will be able to walk you through the various loan options, and discuss your overall ability to qualify for a loan.  This way you’ll be armed with the knowledge of what you can actually afford.

Most sellers and their agents want to see that you have been pre-approved beforehand anyway!

Please leave a comment or share with your friends!

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What’s in a Credit Score Anyway?

Ahhhh….the mystery of credit scores.  Those secret little numbers that come from the big three credit bureaus (Experian, Transunion, Equifax).

Your scores can make or break that loan application you filled out for a new mortgage, car loan, home improvement loan…really just about any type of loan.  Many employers review your credit before making hiring decisions.  Governing bodies that review applications for professional licenses look at your credit to determine acceptance.

With so much riding on these numbers, it would be helpful to understand how they are derived.  Would it not?

Creditors (entities that lend you money) report information from your account (i.e. loan amounts, payment history, balances, etc.) to the main credit bureaus.  These bureaus then compile the data from your account(s) and using complex algorithms, come up with a score that represents your overall credit worthiness.  Higher is better.

Ugh!  Math….I know.  But you really don’t need to understand how the formulas work.  You just need to know what information the formulas value and how much importance is placed on the various types of information that go into the credit score bowl of soup.

Watch the video below for more….

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To Refi or Not to Refi – Is that really the question?

With mortgage rates at or near all time lows, that question is being asked thousands of times each day. But a better question might be: Does it make financial sense to refinance right now?

There are always a host of non financial reasons to refinance (replace a negative amortization loan, move from an ARM to a fixed rate, etc.) but for our purposes here in this post, we’ll look at the hard numbers.

Your Break Even Point

When deciding whether or not to refinance your current mortgage, you must factor in your closing cost recapture time – or simply put your break-even point.

When will I pass through the pain and suffering of closing cost blah, and begin to enjoy the fruits of my new loan (i.e. the monthly savings)?

It’s quite simple really…you just need to take your current principal and interest (P & I) payment, and compare that with your new (lower) payment. Take that difference and divide that number into the dollar amount it will take to close your loan (closing costs). This new number will be the number of months it will take for you to pay off the costs of the new loan.

Example:

My current loan is a 30 year fixed with a balance of $300,000 and a rate of 6.00%

This gives me a P & I payment of $ 1,790.

To keep it simple, my new loan will remain a 30 year with a balance of $300,000 and a new rate of 4.5%

My new P & I payment would be $ 1,514 – or a monthly savings of $276

If it will cost me $ 6,000 in closing costs to refinance, then my break-even point will be 21.7 months. (6,000/276 = 21.7)

The next question is – how long do I plan to stay in my home (or keep this loan)? If the answer is longer than 21.7 months , then I will exceed my break-even point and recapture my closing costs (and then some…)

You can indulge your inner financial nerd, and calculate your break-even point a few different ways (i.e. before and after taxes, with or without PMI, etc…) For more fun with financial calculators click here (requires Java).

Happy Calculating!

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