Santa Barbara Short Sale Facts
When it comes to short sales in Santa Barbara and Montecito, many homeowners faced with such a thing generally don’t understand the process nor how it might affect them both in the short-term and the long-term.
In an effort to help his clients and prospective clients, Santa Barbara real estate agent Timm Delaney has listed below five facts that he believes everyone should know about short sales.
Timm Delaney is an expert when it comes to short sale listings in Santa Barbara
Short sales while designed to save a homeowner from foreclosure and minimize damage to their credit and finances are almost always complicated processes. Working with an experienced Santa Barbara real estate agent who focuses on foreclosures and short sales will make the process seem less stressful, complicated, and can put to rest many of the fears you have regarding short sales. If you or someone you know is facing a short sale or would like to learn more about the process be sure to contact a Santa Barbara real estate agent right away.
- Fact #1:
The first fact that homeowners facing a short sales should know is that their credit rating will drop after a short sale though not as much as it would if the house were to be foreclosed upon. When dealing with a short sale homeowners should expect anywhere from an 80 to 100 point drop on their FICA score. Though this may seem like quite a drop it’s far less damaging than a foreclosure. - Fact #2:
The second thing every homeowner needs to know and understand is that lenders may sometimes ask the seller to sign a promissory note for all or part of the forgiven debt as a condition of the short sale. This can be attached to other assets if the note is not paid when it is due and while this occurrence is actually rare it has been known to happen. Remember when it comes to short sales however everything is negotiable. - Fact #3:
The third thing every homeowner should remember when facing a short sale is that the chances of getting a mortgage within 12 months of a short sale are very low. However making sure that all of your other bills are paid on time can help improve your chances as well is your credit score and homeowners will be surprised at how quickly their credit score improves when this is done. While you may be losing your home it’s of the utmost important to keep your other financial affairs in order in an effort to make your financial recovery as speedy as possible. - Fact #4:
When working with a Santa Barbara real estate agent many homeowners facing a short sale don’t seem to realize that the short sale process itself may take months. There’s no quick workaround for this and no easy way through the process. While some short sales may be quicker than others a homeowner is typically looking at at least 3 to 4 months for the completion of a short sale. An educated Santa Barbara real estate agent will be able to answer all your questions regarding the short sale process and why it takes several months to complete. - Fact #5:
There is a mortgage cancellation tax relief act that was passed some time ago which eliminates taxes on forgiven debt on a principal residence through a short sale. This relief was passed in an effort to ease the burden on homeowners dealing with a short sale. While the laws and regulations regarding this acts tend to vary from state to state, in most short sales the same rules and regulations will apply from person to person. When in doubt how this might affect you be sure to speak with a Santa Barbara and Montecito realtor and real estate agent so that you know the facts.
Short Sale FAQ
When an individual finds him or herself in a challenging situation where everything is at stake it’s almost a certainty that they’re going to have questions about the situation that they’re facing. When it comes to Santa Barbara short sales this too is almost always the case. While some individuals don’t even know what a short sale is others may not know if they qualify for one while others still may not know how the process actually works. Working with a CDPE certified Santa Barbara real estate agent will not only answer questions people might have but will put to rest many of the fears and anxieties they have regarding a short sale and the potential loss of their home.
Timm Delaney is an expert when it comes to short sale listings in Santa Barbara
Not everybody’s going to qualify for short sale and there are several different things a lender will use to determine whether or not somebody is eligible for one. The first qualifier the lender is going to consider is financial hardship. Your lender will look at your situation and determine if the situation itself is actually causing you to have trouble affording your mortgage. Secondly lender will consider what is known as monthly income shortfall. This is insider jargon for “you have more month than money” and lenders will want to see that you can not actually afford your home or will soon be unable to afford your mortgage. Lastly a lender is going to consider insolvency. Lenders want to see that you do not have any significant liquid assets that might allow you to pay down your mortgage. Working with a Santa Barbara real estate agent who deals specifically with short sales will help determine whether or not you qualify for a short sale so be sure to contact one should you see a potential foreclosure in your future.
A mortgage modification can be a great alternative to both Santa Barbara foreclosures and Santa Barbara short sales. In a mortgage modification scenario a lender will generally change one or several of the following.
- Your interest rate
- Your principal balance through a reduction
-
The terms of your loan and example being from adjustable to a fixed rate mortgage.
Many lenders especially in recent times have come to the realization that in many cases it’s actually better for them to work with current homeowners into lower payments and even improve the terms of mortgage to keep homeowners in their homes. Foreclosures actually cost lenders quite a bit of money and can range anywhere from 35 to 50% of the value of the property that is being foreclosed on. This means a keeping borrowers in their homes is good for everybody not just the lender.
There are several things you will need or need to do in order to qualify for mortgage modification these are as follows:
- Information about your primary mortgage, more specifically your monthly mortgage statements.
- Information about any second mortgages equity line of credit’s you have on your home.
- The account balances and minimum monthly payments due on all of your credit cards.
- Any and all information related to monthly payments on any other debts such as student loans vehicle loans.
- Your last tax return.
- Savings and asset information.
- Paperwork that shows your monthly gross or income of your household which includes recent pay stubs or other types of income documentation.
If you’re unsure whether or not you will qualify for mortgage modification feature to speak with a CDPE certified Santa Barbara real estate agent. He/she will be able to provide you with all the answers you require.
In order to find out whether or not you are qualified you and a Santa Barbara real estate agent will need to contact your lender and have all of the aforementioned information ready prior to the call. You’ll be allowed to ask what options are available to you and if by chance the person you end up speaking with does not understand what you’re asking you you’ll be allowed to speak with other representatives who deal with mortgage modification. You may speak with somebody from loss mitigation, mortgage modification, or H.O.P.E.. To find out if you will ask you qualify for mortgage modification prior to speaking to anybody you can visit www.makinghomeaffordable.gov and take their online eligibility test. Once completed this test will let you know whether or not your eligible for a modification through the government-sponsored program known as Home Affordability and Stability Program.
Despite what you may believe or what you may have heard this isn’t an uncommon scenario for homeowners. In cases such as these you and your Santa Barbara real estate agent will want to work closely with your lender and consider a Santa Barbara short sale. A CDPE certified Santa Barbara real estate agent will have undergone plenty of training in how to both avoid foreclosures and negotiate a short sale with a lender. A short sale is a great alternative to a foreclosure because it allows a homeowner to sell a home for less than what they owe and completely avoid foreclosure. If a short sale interests you be sure to contact a Santa Barbara real estate agent for assistance before proceeding.
Affordable refinance is actually quite simple. If you’re lender is either Fannie Mae or Freddie Mac you may be eligible for an affordable refinance. This simply allows homeowners refinance their home and lower their monthly mortgage payments. Speaking with a Santa Barbara real estate agent and working closely with one will help you determine whether or not this option is available to you.
- According to government documentation the following is a list of affordable refinance qualifications:
- You must be the owner/occupant of the home with one to four units.
- Your property loan is either owned or securitized by Freddie Mac or Fannie Mae.
- You are current on your mortgage payments at the time of application and you haven’t been more than 30 days late on your mortgage payment within the last year.
- The current value of your home is either about the same or slightly less than the amount you on your mortgage.
- Your current income is sufficient enough to maintain a new mortgage payment.
- The refinance program improves long-term affordability or stability for the homeowner.
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