Dagny Eason, Fairfield County's Real Estate Blog: April 2017

FAQ's About Short Sale - What You Need to Know! What You Need to Do!

A Few Questions and Answers About Short Sales and How to Minimize Credit Impact

                 

           Certified Depressed Properties Expert CDPE Dagny Eason short sale

 

Back in February, I wrote a blog about short sales and using a Certified Depressed Properties Expert (CDPE) to assist with the transaction.  I received great feedback on that information and I wanted to continue the conversation by giving you a list of FAQ's and their answers regarding short sale.

 

                                                                   Certified Depressed Properties Expert CDPE designation Dagny Eason

 

It all begins with:

 

"I am having financial difficulty.  Should I stop paying my mortgage?"

 

 

That's a very subjective question.  Let me ask you some inquiring questions in return.

 

  • How long can you continue to pay your mortgage and your living expenses before something has to give?
  • Do you have a lot of debt (credit cards, car payments, doctors bills, etc.)?
  • Do you have a source of income - ie. retirement account, rainy day savings, access to home equity line of credit, that you can access short term to help you through this?
  • Have you done everything you can to cut your living expenses back before you think about not paying your mortgage?

 

                                  Dagny Eason short sale blog foreclosure advice Wilton CT

 

OK - so you see it's complicated.  None of my answers will be cut and dry.  Everyone's situation is unique and I am not a lawyer, but I am a Realtor who has been through the process many times over on both ends of the spectrum, with Sellers and Buyers.  Plus, I'm a Certified Depressed Properties Expert so I think I speak from experience when I give you my two cents.

 

Ideally, no one wants to sell their property as a short sale, so if you can access a source of income to get you through this troublesome time, that would be best.  However, you don't want to get further into debt (especially credit card debt) that you cannot dig out of once your financial situation turns around.  So word of caution, do not overextend on credit.  That will not help!

 

                                                                                                       

 

Take a good, hard look at your finances and make a list of all your monthly expenses and another of total amounts owed.  From there, you can answer just how long you have to meet those expenses until your source of income runs dry.  If you can, make cuts to your expenses' list.  Drop the extra cable channels, sell that car you use only during the summer, stop using a lawn person or find someone cheaper, increase your deductibles on your insurances, adhere to a strict grocery budget each week... It's worth a call to your cable company and your home alarm company to see what they can do for you to cut those bills.  In so many instances, all you have to do is ask!

 

                                       

Next question I get is:

 

"If I stop making mortgage payments, do I automatically go into foreclosure?

 

You have to consult your lending documents, but most likely if you stop paying your mortgage, the bank has the right to call in your loan and possibly evict you from the property.  BUT, that is not what you are going to do!  Before you decide that it is time to stop paying your mortgage, get a consultation with an attorney who specializes in foreclosures and short sales.  A 45 minute consult for $some could save you much heartache and you will arm yourself with knowledge and possibly find another option.  For instance, perhaps your lender will agree to modify your loan so you won't have to sell.  Or maybe they will move the next two payments due to the end of the loan period to give you two months of breathing room.  Lawyers are paid to do this kind of negotiating and come up with options.  I can recommend a lawyer to you if you ask.

 

 

A lawyer can work with you and your lender to keep things amicable if you need to default on your mortgage.  Along with your lawyer, you can decide if there is urgency to get out of your property or if you might be able to stay for a length of time while it sells without paying the mortgage.  Working with a lawyer, who works with your lender, will keep you out of foreclosure for the time being.  Remember, foreclosure is different from short sale.  If you need a refresher on the differences, please review my blog from Feb. 28th entitled "Using a Certified Depressed Properties Expert Can Save You More Grief!"

 

How badly will my credit be affected due to a short sale?

 

Part of the answer to this question may depend upon how your credit was before your financial troubles began.  There's no sure way to tell what the adverse effects will be and for how long.  Generally, if you have never been late on a payment on your credit cards, car payments, student loans, doctors bills, vendors who do work for you, etc, your credit score will decrease due to a short sale but it won't be as much had you missed payments. 

 

Real Estate Questions

 

It's been my experience that a lawyer will tell you to keep paying your bills - other than your mortgage - if you are going to do a short sale.  That way, you will keep your credit rating somewhat intact.  You are going to need a place to live after you sell.  Unless you are paying cash - and you won't be able to obtain a mortgage for some time - so you will need to rent.  In order to be able to get a rental you will need to have some kind of credit rating.  No one wants to rent to someone who may not pay them!  If you have a history of not paying bills, chances are you won't pay your rent.  So keep up with your other payments!

 

                             Dagny Eason realtor real estate short sale foreclosure

 

A point to keep in mind, make sure you understand the terms of how your mortgage loan will close with your bank before you agree to it.  How the bank reports it to the credit bureaus will make a difference in your credit rating.  If it is reported as "paid in full" your credit score won't be impacted as much as if it is reported as "settled for less than full balance".

 

                                                       

 

I hope this helps clear up some questions on short sales.  There's alot of fear of the unknown when thinking of selling short.  Arm yourself with knowledge and ask a lot of questions!  And, use a Certified Depressed Property Expert like me, Dagny Eason,  to assist you in selling or buying a short sale or foreclosure property!  Please forward this blog on if you know someone who is struggling.  I'm happy to answer any questions.

 

A Few Questions and Answers About Short Sales and How to Minimize Credit Impact

 

 

Looking to buy a home in Fairfield County?

 

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This article has been written by Dagny Eason.

 

Feel free to call Dagny Eason to discuss this at (203) 762-1700

 

  Dagny Eason | Broker 

   Direct Line: 203-762-1700 

Website: www.DagnysRealEstate.com

Email: Dagny@DagnysRealEstate.com

 

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I am always mobile, but right now I am near Lower Fairfield County, CT

 

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Comment balloon 23 commentsDagny Eason • April 27 2017 02:36PM
FAQ's About Short Sale - What You Need to Know! What You Need to Do!
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A Few Questions and Answers About Short Sales and How to Minimize Credit Impact Back in February, I wrote a blog about short sales and using a Certified Depressed Properties Expert (CDPE) to assist with the… more