A foreclosure costs a lot of money and time delays
Many hear about the phrase "real estate short sale" and do not fully grasp what it means. If you read the newspapers, or turn on the TV and the odds are high that you will come across stories about declining real estate market conditions and the increasing willingness of banks and other financial institutions to consider real estate short sales as an alternative to foreclosure.
Calling the current real estate market a complete meltdown would not be unfair in some cases, such as in Detroit. Declining real estate markets are the primary reason for the rise in short sale real estate opportunities.
The exact definition of a real estate short sale is that it is what occurs when a bank agrees to let a property be sold for less than the amount owed to the financial company. There are two conditions that must be met before a bank is likely to approve this: Firstly: Market values are such that the property's sale price cannot cover the outstanding mortgage balance(s). A complete inability to make the mortgage payments must also be present for the bank to agree to the sale.
As an example, suppose a property was purchased five years ago for 217,000 dollars with an adjustable rate mortgage. The owners decided two years later that they needed a second mortgage of 10,000 dollars, bringing their total to 227,000 dollars. Home owners typically have made only a negligible dent in the amount of money that has gone towards paying off their debt in five years. The house might also be in a part of the country where the market values have fallen to a low of 215,000 dollars and their interest rates have gone up from around seven percent to up around eleven percent. Add in the additional problem of one of the owners having lost their job, and you end up with a very likely real estate short sale scenario.
A foreclosure costs a lot of money and time delays that the bank may not want to waste, and thus, they might allow a short sale instead. It's better to accept a definite amount of money right away, so that the property can be off the bank's book, than to accept an unknown amount at a distant point in the future. This is generally how a real estate short sale works, though there are other complications that can arise from having owners and lenders not agreeing to the terms of the sale.
A real estate short sale is an unpleasant experience for an owner, but it is not the worst thing in the world. If nothing else, it certainly beats being forced to accept a foreclosure on your credit report. On the other hand, a truly savvy investor can take advantage of these short sales for excellent buying opportunities.
Calling the current real estate market a complete meltdown would not be unfair in some cases, such as in Detroit. Declining real estate markets are the primary reason for the rise in short sale real estate opportunities.
The exact definition of a real estate short sale is that it is what occurs when a bank agrees to let a property be sold for less than the amount owed to the financial company. There are two conditions that must be met before a bank is likely to approve this: Firstly: Market values are such that the property's sale price cannot cover the outstanding mortgage balance(s). A complete inability to make the mortgage payments must also be present for the bank to agree to the sale.
As an example, suppose a property was purchased five years ago for 217,000 dollars with an adjustable rate mortgage. The owners decided two years later that they needed a second mortgage of 10,000 dollars, bringing their total to 227,000 dollars. Home owners typically have made only a negligible dent in the amount of money that has gone towards paying off their debt in five years. The house might also be in a part of the country where the market values have fallen to a low of 215,000 dollars and their interest rates have gone up from around seven percent to up around eleven percent. Add in the additional problem of one of the owners having lost their job, and you end up with a very likely real estate short sale scenario.
A foreclosure costs a lot of money and time delays that the bank may not want to waste, and thus, they might allow a short sale instead. It's better to accept a definite amount of money right away, so that the property can be off the bank's book, than to accept an unknown amount at a distant point in the future. This is generally how a real estate short sale works, though there are other complications that can arise from having owners and lenders not agreeing to the terms of the sale.
A real estate short sale is an unpleasant experience for an owner, but it is not the worst thing in the world. If nothing else, it certainly beats being forced to accept a foreclosure on your credit report. On the other hand, a truly savvy investor can take advantage of these short sales for excellent buying opportunities.
posted by Debt Consolidation Loan at
12:20 AM
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