Working Caregiver- Facing Foreclosure in Austin, Texas?
Simply stated, a short sale occurs when a homeowner owes more than their property is worth, and their bank agrees to accept less than what they owe as "payment in full."
Consider a Short Sale to minimize the damage to your credit score
Are you behind or about to get behind in your mortgage payments? Do you anticipate the lending institution will foreclose soon? Do you owe more on your home than it is worth in the current market? A short sale might be an alternative to foreclosure.
Simply stated, a short sale occurs when a homeowner owes more than their property is worth, and their bank agrees to accept less than what they owe as "payment in full." You and your property must meet certain financial and valuation criteria to be accepted into the lender's pre-foreclosure program. You must prove a true financial hardship exists and the property must be worth less than what you owe on it based on an appraisal obtained by the lending institution.
Why are banks willing to do this? The foreclosure process is usually more expensive than the discount the bank takes on a short sale and foreclosure takes a long time to complete. Banks borrow money from the Federal Reserve and loan it to the public to make a profit. If their funds are tied up in underperforming loans or real estate, this decreases their funds available to lend, and thus decreases their profits.
While selling your home on a short sale program saves your credit from a foreclosure hit, your credit rating will still experience a decrease in score, just not as large. If you have good credit otherwise, it should not take as long to restore the pre-default scores. The decision to pursue the short sale relief should not be taken lightly. Talk to your lender and Realtor about your situation as soon as you determine that you cannot make any more payments. There are few options available once the property is posted for sale on the county's courthouse steps.
Sandra McElvaney is a Realtor living in Onion Creek. To contract Sandra, call (512) 751-6352 or send an email to smcelvaney@sbcglobal.netto receive her monthly real estate newsletter. Sandra's website is www.KeysToAustin.com.
