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With a foreclosure on every corner, and many homes “underwater”, what is a homeowner to do in today’s real estate environment?

Real estate values have fallen 20-50 percent or more in many places from their highs set a few years ago and unemployment in California is getting into the double digits. Throughout the country, over one third of home owners owe more than their homes are worth. Better than one out of every eight home loans are delinquent in some respect, and there doesn’t seem to be an end in sight.

If you are aproaching the point of defaulting on your home loan, you basically have three options: a short sale, loan modification or a foreclosure. Many professionals these days are advising a a short sale, as they offer an upside for Realtors, agents, lenders and buyers. But that then begs the question, is a short sale best for you or for them?

A lot of the time, a short sale is not really the best solution, although others working with you in the process may lead you to think otherwise.

Why might this be? Let’s take a look. The first question is what to do when you realize you can no longer pay your home loan. If you should stop making payments, what will happen?

An immediate consequence is that your credit will be harmed. Your credit score is needed to show to lenders you may work with down the line who might decide at some later point whether they want to lend you money, and could require you to work with hard money lenders in the future. Also, your credit score is also being used by employers who may be making a decision on whether or not to hire you. Ruining your credit is not something to rush headlong into.

Your FICO, or credit score is figured using outdated and company owned methods that use information compiled over time from your credit files. The people in charge of these scoring systems say that they are supposed to be an indicator of how likely someone is to stop paying on a debt or loan during the first two years.

There are a number of companies other than the big three that have their own scoring models, most running numbers between 400 and 990. If you stop making payments on all of your loans, most of these formulas will drop your score below the 600 mark.

If you have a credit score of less than 600 in today’s market, putting together a loan for any purpose can be very difficult (except, of course, if you are talking about private hard money
). When sitting down to make your decision on which way to go, short selling your home will not save your credit, despite what many in various industries might tell you. So what is the benefit of short selling your home?

The largest benefit is getting out from under the debt you currently owe, and avoiding a foreclosure on your credit. A short sale can impact your score about the same as a foreclosure, but with a short sale, you will be eligible for another conventional type loan in about two years or so, as opposed to three or more that a foreclosure will require.

A potentially better option to consider is loan modification
. Oftentimes, this is a long process to work through, but if you would like to stay in your home and save your credit, a loan modification may be the best option to look at.

You need to be sure to do your own due dilligence before deciding on what direction or option you are going to pursue. Depending on what state you are in, there will be different ramifications for the various options. Seek out a good real estate professional and/or real estate lawyer, sit down, and look at all your options before you make a choice. When making this decision, make sure you are comfortable with the direction you choose, good luck!

Just how is the average American supposed to make their way through the existing real estate market and foreclosure crisis?

Residential real estate values have slid forty percent or more in some places from their highs set a few years ago and unemployment in states such as California is above the ten percent mark. Across the nation, more than a third of home owners owe more than their homes are worth. About one in every eight of all mortgages are behind on payments, says the Mortgage Bankers Association.

If you are at the point of defaulting on your mortgage, you have only a handful of avenues to go: foreclosure, a short sale or a loan modification. Many professionals these days are advising a a short sale, due to the fact that they offer an upside to Realtors, agents, lenders and buyers. But that then begs the question, is a short sale best for you or for them?

Typically, it truly is not in your best interest, although many involved in the process want you to think otherwise.

If we take a closer look, we can see the consequences to various actions. So you are struggling to make mortgage payments. What happens should you suddenly stop paying?

First, it will really hammer your credit score. That score is crucial to lenders you may work with down the line who will decide at some later point just how good a risk you are, and may force you into working with hard money lenders down the road. Additionally, it’s also being used by employers who may be making a decision on whether or not to hire you. It’s not a figure to be taken lightly.

This important figure is figured using outdated and proprietary formulas using information that has been compiled over time, encompassing your entire borrowing life. According to the credit bureaus, these scoring systems are meant to give an indication of how likely a particular person is to stop paying on a debt during the first two years of it’s lifetime.

There are a number of companies other than the big three that have their own scoring models, most running numbers between 500 and 900. If you stop making payments, most of the models will lower your score into the 600 range or lower

If your credit score is below 650 in today’s market, finding a loan for any purpose can be terribly difficult (except, of course, if you are talking about private hard money loans). When sitting down to make your decision on which way to go, doing a short sale of your property will not keep your credit in pristine shape, despite what many in various industries might tell you. So is there really a beneift to going through a short sale?

The largest benefit is getting the debt you owe forgiven (be sure to read the fine print), and avoiding a foreclosure on your credit. A short sale can impact your credit score about the same as a foreclosure, but with a short sale, you will be eligible for another conventional type loan in about two years or so, as opposed to 3 or more with a foreclosure.

A potentially better option to consider is loan modification
. Oftentimes, this is a lenghty process to deal with, but if you want to stay in your home and save your credit, a loan modification may be a better solution to consider.

You need to be sure to do your own research before deciding on what direction or option you are going to take. Depending on what state you are in, there will be different ramifications for the various options. Find a good real estate professional and/or real estate attorney, sit down, and discuss all your options before you make a choice. This is a large financial decision, it is important to get it right!

With a foreclosure on every corner, and many homes “underwater”, what is a homeowner to do in today’s real estate environment?

Real estate values have decreased 50 percent or more in some areas from their highs set a few years ago and unemployment in California is above the ten percent mark. Throughout the country, more than thirty percent of home owners owe more than their properties are worth. Better than one out of every eight home loans are delinquent in some respect, and there doesn’t seem to be an end in sight.

If you are in the position of defaulting on your home loan, you have only a handful of avenues to go: foreclosure, a short sale or a loan modification. The pressure these days is toward short sales, as they offer an upside for Realtors, agents, lenders and buyers. The question then becomes, is a short sale truly your best option as a consumer?

Generally, a short sale is not really the best solution, even though others working with you in the process may lead you to believe it is.

Let`s look at this in more detail. So you are struggling to make mortgage payments. What happens should you suddenly stop paying?

First, it will really hammer your credit score. Your credit score is a key point to lenders you may work with down the line who might decide at some later point if you are worthy of making a loan to, which could make you seek out hard money lenders if you should need a loan. Also, your credit is also being used by potential landlords and employers. It’s not a figure to be taken lightly.

The score itself is created with old and company owned methods using information collected throughout your life as a borrower. According to the credit bureaus, these scoring systems are meant to give an indication of how likely a particular person is to stop paying on a debt during the first two years of it’s lifetime.

There are a number of companies other than the big three that have their own scoring models, most running numbers between 500 and 900. If you stop making payments, most of the models will lower your score into the 600 range or lower

If your credit is in under 680 based on one of the major credit reporting agencies in today’s lending environment, getting a loan of any kind can be very hard (short of working with private hard money loans). When sitting down to make your decision on which way to go, a short sale of your house will not keep your credit in pristine shape, despite what many will have you believe. So is there really a beneift to going through a short sale?

The largest benefit is getting the debt you owe forgiven (be sure to read the fine print), and keeping a foreclosure off your credit report. A short sale likely will impact your credit score about the same as a foreclosure, but with a short sale, you will be eligible for another real estate loan after about two years, as opposed to 3 or more with a foreclosure.

A potentially better option to consider is loan modifications. this can often be a long process to work with the banks on, but if you need to stay in your house and save your credit, a loan modification may be a good avenue to look at.

You have to do your own due dilligence before you choose which course of action you are going to take. It will also matter in which state you live, as there will be different ramifications for the various options. Locate an honest real estate professional and/or real estate attorney, make an appointment, and go through all your options before you make a decision. Making this decision is a big deal, and it is important to surround yourselves with professionals who will help you make the best decision possible!

How are typical Americans to navigate the current foreclosure crisis and come out unscathed in the real estate market?

Real estate values have decreased forty percent or more in some areas from their 2006 peak and unemployment in California is well into the double digits. Nationwide, over 30 percent of mortgage holders owe more than their houses are worth. About one in every eight of all mortgages are behind on payments, says the Mortgage Bankers Association.

If you are in danger of defaulting on your loan, you basically have three options: a loan modification, a foreclosure or a short sale. The pressure these days is toward short sales, because they offer an upside for real estate agents, lenders and buyers. The question then becomes, is a short sale truly your best option as a consumer?

Generally, it really is not the best option to pursue, although others working with you during this time of need may want you to think otherwise.

Why might this be? Let’s take a look. The first question is what to do when you realize you can no longer pay your home loan. If you should stop making payments, what will happen?

Right off the bat, it will damage your credit. Your credit is needed to show to future lenders who might decide at some later point whether they want to lend you money, which could require you to work with hard money lenders in the future. Increasingly, it’s also being used by employers who may be making a decision on whether or not to hire you. It’s not a figure to be taken lightly.

The score itself is calculated with secret and patented formulas that use information collected from your entire credit history. According to the credit bureaus, these scoring systems are meant to give an indication of how likely a particular person is to stop paying on a debt during the first two years of it’s lifetime.

Other companies have their own formulas that do pretty much the same thing. On another popular credit score scale, which runs from 500 to 990, stopping payments on all your loans will drop you into the low 600s.

If your credit is in under 680 based on one of the major credit reporting agencies in today’s market, getting a loan of any type can be impossibly difficult (unless you are looking at going with private hard money
). When deciding on which direction you want to go, short selling your home will not keep your credit in pristine shape, despite what many may want you to believe. So is there really a beneift to going through a short sale?

The biggest benefit is getting rid of the large debt of your home and the drag it has on your finances, and keeping your credit report foreclosure free. A short sale can impact your credit about the same as a foreclosure, but by short selling your home, you will be able to get another conventional type loan in as little as two years, as opposed to 3 or more that a foreclosure will require.

You may want to consider looking into loan modification
. This can be a tough process to work through, but if you want to stay in your house and save your credit, a loan modification may be a great option to consider.

You must to do your own research before deciding on what direction or option you are going to take. Depending on what state you are in, there will be different ramifications for the various options. Find an honest real estate agent and/or real estate attorney, make an appointment, and discuss all your options before you make a decision. Making this decision is a big deal, and it is important to surround yourselves with professionals who will help you make the best decision possible!