Massachusetts Real Estate- Merrimack Valley
Real Estate in Essex and Northern Middlesex Counties, Massachusetts
Visit my site Massachusetts Short Sales . info to read the article I wrote on how Stopping a Foreclosure Auction with a Short Sale.
Short sales have many benefits to home owners. One such benefit is if we are currently negotiating a short sale offer we can typically stop any upcoming foreclosure auctions. You have options to foreclosure. Almost all of your options will benefit you more than a foreclosure sale. Take the time to learn your options to foreclosure.
I must start out by first saying that I am not a bankruptcy attorney and by no means an expert. I am writing this post from the standpoint of being a Massachusetts Short Sale Realtor and what I have experienced. If you are in a pre-foreclosure situation and you are considering a bankruptcy to save your home you should consult with a bankruptcy attorney.
Bankruptcy should not be considered if the bankruptcy will not allow you to keep your home and there are no other benefits to you. First of all you should always try to avoid foreclosure, you have several options to do so. On of the more popular options is a short sale. Many times, in a short sale, we negotiate the settlement of the deb,t preventing the lien holder from pursuing a deficiency judgement for any deficiency balances. Sometimes a lien holder may retain the right to go after a deficiency judgement in a short sale. When they do, many times they do not pursue the deficiency judgement as the banks feel they are chasing money they probably will not get.
Many homeowners are trying to avoid a bankruptcy and a foreclosure on their credit. A short sale is one avenue to prevent either of showing up on your credit report. After a short sale, if the bank then does decide to pursue a deficiency judgement against you, is the time to consider a bankruptcy.
Many times I see home owners drive themselves crazy and spend good money after bad in trying to save their home. If you owe $400,000 on your home and it is now worth $260,000, is it worth paying on an asset that is no longer worth anywhere near what you paid for it? Remember, I have never seen a bank readjust the house price. You will always owe the money you borrowed against your home. It would take 15+ years at a modest appreciation to even get close to what you owed on that home. Ask yourself, is it worth it?
Disclaimer- Again, by no means am I an attorney or an expert on bankruptcy. This post should not be considered legal advice and if you are in need of legal advice please consult an attorney. Many bankruptcy attorneys offer a free consultation to go over your situation and at times bankruptcy can and should be part of your pre foreclosure strategy.
I have provided this post, because I know if you are concerned about losing your home, finances may be difficult and you are looking for information on the internet and I wanted to share what I have seen with bankruptcy that has or has not worked for upside down homeowners to give you a starting point.
If you have you are facing foreclosure or missing mortgage payments, feel free to call. As a Massachusetts Short Sale Realtor I have helped guide many home owners through their options. Call 978-360-0422
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Unfortunately a short sale may effect your credit scores. Make no mistake, the “ding” to your credit score can be very minimal (50 points) to much higher (150 points or more). While a short sale can have less of or the same impact as a foreclosure on your credit, it has the benefits to your future financial health. Please do not think a short sale will not effect your credit it will and it is irresponsible for someone to tell you otherwise. Remember that how the short sale is reported can effect your credit score but equally important is how many late payments did you rack up while going through the process of a short sale. No one can really predict the impact to your credit score but a short sale definitely can reduce the impact to your credit over a foreclosure.
There are many variables to how much your credit score will be impacted by a short sale. The number of rolling late’s on your mortgage how your mortgage company reports the short sale to the credit agency as well as what your original credit score was. It appears that the higher your score the harder your hit. These will be some of the factors in determining how much of an impact a short sale will have on your credit.
The other point to remember is, that many times, while struggling with your mortgage, you may be experiencing trouble with other lines of credit. Every late you may have on credit card, car or student loan payments or any other line of credit, will impact your credit score. The more late payments, of any type, that is reported to the credit bureaus, the more impact it will have on your credit score. Many times by the time you are considering a short sale, a home owner will have already have had some serious impact to their credit score.
There is one significant difference between a foreclosure and a short sale. A foreclosure stays on your credit for 7 years. While your credit score may improve over time with both a short sale and a foreclosure, the foreclosure will be reported as a foreclosure and when applying for a mortgage and some other lines of credit they do ask the question if you have ever been foreclosed upon. A foreclosure may impact your ability to get future credit in the intermediate term.
The bigger question to ask yourself is do you have another alternative? For many underwater home owners a short sale may be the best and only alternative to an imminent foreclosure. And, while yes, a foreclosure effects your credit there are other advantages to a short sale that makes it a better solution to a foreclosure. Here is a recent article I wrote, Considering a Short Sale.
In a nut shell, if you are facing a future foreclosure and you see no way to stay in your home or it is not financially practical to stay in your home, a Short Sale is probably your best option, irregardless of the impact on your credit score.
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This post, Considering a Massachusetts Short Sale, was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. If you are facing foreclosure, have missed mortgage payments or recieved your notice to cure you can contact Kevin by email at kevin@kevinvitali.com or call 978-360-0422. Call a MassachusettsShort Sale Realtor that can help. Don’t wait.
Short Sale Services in northeast Massachusetts, around the Merrimack Valley. Short Sales in the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury and surrounding areas
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One big question I am asked when meeting with potential Massachusetts Short Sale sellers, is if they “should stay in the home or move immediately during the short sale process?”
The answer to this question is of course is very personal to each individual’s situation. Sometimes you may be making a move for a job transfer or to care for a family member and you have no other choice, but to pack up and move. But, for most home sellers going through a short sale there will be pros and cons to staying or going. <!--more-->
Staying in your home during a short sale
Pro’s
Con’s
If you decide to stay, the biggest piece of advice I can give you is to start packing now!! Your are going to be moving one way or another. Overall for many, staying during the short sale process is usually the preferred option.
Moving from the home during the short sale
Pro’s
Con’s
If you do decide to leave, make sure you continue to maintain the home. You can prevent costly repairs and if it is maintained you will get a higher purchase price. One of the biggest issues we have with vacant homes is pipes freezing and bursting in the home, causing not only plumbing problems but damaged floors, walls, ceilings, etc….
Regardless of whether you decide to stay or go, keep the home in good showing condition. While it may be disheartening you are losing your home to an unwanted sale or foreclosure, it behooves you to secure a quick offer for the highest price possible. The more money you can get the less impact it may have on you in the future.
As you can see that either way, stay or go, is a very personal choice for each individual.
We hear the term deficiency balance, when we are talking about Massachusetts Short Sales or Foreclosures. It is the biggest concern for a home owners going through a short sale or facing a foreclosure.
A deficiency balance is the difference between the amount owed on a loan versus the price for which the home is sold. For example: If he home has a total balance of $420,000 owed on the mortgage and is eventually sold for $280,000, the deficiency balance is $140,000.
A short sale offers many advantages over a foreclosure when it comes to the deficiency balance. In a short sale, you have some control over the how the deficiency balance is handled. In a short sale, my short sale team works hard to remove the opportunity for the bank to pursue a deficiency judgment. This is where the bank/lender approves the short sale and reports the mortgage as settled to the credit agency, basically the amount of the deficiency balance is forgiven by the lender.
A second scenario would be where the lender approves the short sale and retains the right to go after a deficiency judgment (I will address the deficiency judgment later). One thing to remember, if the lender retains the right to go after the deficiency judgment, this does not mean that they will. Usually if they will, it will happen with in the first 6 months after the short sale.
Lastly, we can see the banks ask for a small amount of money at the closing table to or a no interest personal note at the closing table. Most of the time in this scenario they will agree to write off the loan as settled.
The one thing to remember about short sales is we can never predict the outcome of a short sale and the outcome is negotiated for the best possible terms, for you the seller, that the bank will accept. At least in the short sale, you have the opportunity to negotiate and have some control the over the outcome of what happens to a deficiency balance, where in a foreclosure the deficiency balance is automatically established.
Basically if the lender/bank pursues the deficiency balance, you will be “sued” by the bank and the courts will order you to pay the remaining balance. You will be responsible for the deficiency balance. I believe in the state of Massachusetts a lender has 2 years to file for the deficiency and 20 years to collect.
What can happen after a judgment is levied:
If you are involved in a short sale or a foreclosure, it is highly recommended you consult an attorney so you understand the ramifications of the short sale and the short sale approval or the foreclosure.
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If you are a Massachusetts homeowner that has missed mortgage payments, or facing foreclosure or a home buyer interested in buying a foreclosure or short sale call Kevin at 978-360-0422. I will explain your possible options to foreclosure. Every situation is different and you have about five options to consider. If a short sale is your best option my short sale team will work to complete a successful short sale on your home. Combined we have successfully closed 100′s of Massachusetts Short Sales. My closing ratio is almost 100% on Massachusetts Short Sales.
Short Sale Realtor Services in northeast Massachusetts, the Merrimack Valley and surrounding area including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury.
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This questions was just asked on Trulia,
I thought it was a great question, as many home buyers think that a short sale means they can steal the property. In most cases, that is not true. Does it happen? Yes, but very infrequently. Unfortunately, many home buyers are disappointed and miss out on great homes because they do not understand how banks think about short sales.
My response was,
There are many reasons the property could have been on the market for that long. It could have started high as a straight-up listing and then somewhere along the way became a short sale or maybe it has been tied up with previous offers…. who knows!! In general, it is not relevant to what the property is worth and what the bank will accept for an offer.
As a Massachusetts Short Sale Realtor who has closed on numerous short sales I have listed and negotiated, I can tell you the banks have a formula on their short sales and what they are willing to accept for a purchase price. It does vary from bank to bank, so it is hard to predict what a bank will accept. I can tell you, that most banks will sell for less than fair market value. How much is dependent on the price range the property is in, who the banks is and what other items need to be paid for that is not considered typical in a short sale.
Most banks will give up 15-20% off fair market value. Sounds great!!….. but wait!! Out of the 20% you have to add real estate commissions, attorney fees, closing costs, maybe money to junior liens, maybe municipal liens…. and so on. Typically, it can translate into a 3-10% discount for the short sale buyer.
If you are working with an agent that list short sales, they will be able to guide you through the process. The first piece is to determine fair market value of the property, than try to back in to a discounted offer. If you are truly interested in buying a short sale property give it your best shot, but remember a short sale is not a license to steal, submit an offer based on knowledge, not windage and elevation.
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If you are a Massachusetts homeowner that has missed mortgage payments, or facing foreclosure or a home buyer interested in buying a foreclosure or short sale call Kevin at 978-360-0422. I will explain your possible options to foreclosure. Every situation is different and you have about five options to consider. If a short sale is your best option my short sale team will work to complete a successful short sale on your home. Combined we have successfully closed 100’s of Massachusetts Short Sales. My closing ratio is almost 10
Other Short Sale Information:
Short Sale Realtor Services in northeast Massachusetts, the Merrimack Valley and surrounding area including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury.
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A common concern for many upside down homeowners in Massachusetts that are considering a short sale is….. Who pays the fees associated with the short sale, including Realtor Commission and Attorneys Fees?
It may vary depending on who you use as a Short Sale Realtor/ Short Sale Negotiator. But my short sale team, made up of myself and my attorneys office do not typically charge the homeowner any fees to complete a Massachusetts Short Sale. Our fees and typical closing costs are contingent on short sale approval and are paid for by the bank!! Most of my short sale clients show up to the closing table bringing no money to the closing. Sometimes, depending on the loan program the seller receives money from the bank!! Recently we are seeing homeowners receive up to $35,000 in certain short sales.
In a short sale transaction you may typically see the following:
All of these fees can add up to many of many thousand of dollars but will typically be paid for by the bank.
If you are an upside down home owner, you should never have to pay any fees upfront, be very leary of anyone who wants to charge an upfront fee for short sale negotiations. There are plenty of reputable short sale negotiators that do not charge the seller for the negotiation of a short sale.
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This post, Who Pays the fee’s in a Short Sale? was provided by Kevin Vitali. If you are a Massachusetts homeowner that has missed mortgage payments, or facing foreclosure, call Kevin at 978-360-0422. I will explain your possible options to foreclosure. Every situation is different and you have about five options to consider. If a short sale is your best option my short sale team will work to complete a successful short sale on your home. Combined we have successfully closed 100’s of Massachusetts Short Sales. My closing ratio is almost 100% and I can help!!
Short Sale Realtor Services in northeast Massachusetts, the Merrimack Valley and surrounding area including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury.
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One of the vital pieces the banks are looking for in a short sale is the financial hardship. You will be asked to submit a hardship letter. I have a format that I use for all of my short sale sellers.
Remember to keep in simple!! The short sale hardship letter should be neatly handwritten and reduced to less than one page. Bear in mind the short sale negotiator is working on hundreds of files and don’t want to be reading page after page of why you can no longer make your mortgage payment. Stick to the the financial/ hardship facts. Do not add opinion or make it long and drawn out. The negotiator is just looking for a reason that you are late on your mortgage payment not your whole life story.
Following is a list of some acceptable short sale hardships:
These are some of the more common reasons for a hardship that the bank finds acceptable. [intlink id=”258″ type=”post”]Strategic short sales[/intlink] are now becoming more common place and do not have a financial hardship connected with it. Your short sale Realtor should be able to help you with making a concise, clear hardship letter.
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This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. If you are facing foreclosure, have missed mortgage payments or recieved your notice to cure you can contact Kevin by email at kevin@kevinvitali.com or call 978-360-0422. Call a short sale realtor that can help. Don’t wait.
Short Sale Services in northeast Massachusetts, around the Merrimack Valley. Short Sales in the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury and surounding areas
As a Massachusetts Realtor who has assisted many home owners with short sales over the past few years, I would like to impart a little wisdom to homeowners that are facing foreclosure.
The first piece of advice is not to sit back, get overwhelmed and do nothing. You have options to foreclosure. You generally have 5 options to avoid foreclosure and almost in all circumstance you are better off exercising one of these options rather than letting the bank foreclose. For most underwater
homeowners, a loan modification or a short sale are the two most viable with a short sale usually being the only option. While you will “sell” your home during a short sale, a short sale provides you with a fresh start.
One problem I see with homeowners is they do not rationally think about their situation and they chase options that are just not viable for them. Meanwhile they spend so much time trying to make a decision or chase an option that will not work, while other either a foreclosure date sneaks up on them or they have spent a 6-months to a year chasing a loan modification that had no chance of being approved.
There is some rhyme and reason to a loan modification. First off you do need to qualify for a loan
modification it is not arbitrary.
This means you do need to be working and there are income guidelines to be met. If you are not working or have had a serious loss of income chances are slim to none of qualifying. If you have had a loss of income but are working the qualifying ratio is usually 41%. Meaning, the banks want to see 41% or less of your gross income must go towards your mortgage, taxes insurance as well as your consumer debt.
Consumer debt is credit cards, auto loans, student loans, installment payments and such. The farther away you get from the 41% ratio the less chance you have of qualifying.
It is also important to remember how the bank modifies the loan. I have never seen a bank reduce the principal of the loan. They modify the loan through rate reductions and re-amortizing a loan.
So what does that mean? If your rate is currently 6% they may opt to lower the rate a couple percentage points. They will lower it to current market rates or sometime a little bit below. A 2% drop in rate on a 250K mortgage may translate into a $300 a month savings.
Re-amortizing the loan to 40 years could save you another $140 per month for a total saving of about $440 a month. Realistically, would $440 a month allow you to make your mortgage payments? The answer to that is personal to each homeowner.
Now the other thing that happens quite frequently, is if you do get your loan modified the payment is higher than your current payment!!
Why? A loan modification can take time. Say you were already late several months, than you went into a loan modification. I’ve seen some loan modifications take up to a year to get approved…. 5-7 months is definitely not out of the question. If your original loan balance was $250,000 and you have ended up missing a 10 months of payments now instead of owing $250,000 you can now owe upwards of $270,000 dollars.
The next question to ask yourself is, do you really want to own a home that is worth 20-50% less than what you actually owe on it? Probably not.
If your home is worth $200,000 today and you owe $270,000 it could take you 8-10 years of average appreciation 3-4% just to break even again assuming the market has hot bottom and we see an appreciation of 3-4% a year in home appreciation.
My advice is try to remove the emotion and think rationally about your situation. Realistically where do you stand to day financially and best guess what do you think a bank will do for a loan modification if you even qualify?
You have a limited time before the bank forecloses, don’t waste time chasing a loan modification.
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This post, Massachusetts Short Sales- Chasing the Loan Modification, was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. If you need to do a short sale in Massachusetts or would like to know all of your options to foreclosure, contact Kevin by email at kevin@kevinvitali.com or call 978-360-0422.
Real Estate Services in the northeast Massachusetts, around the Merrimack Valley and including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury
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