IS YOUR HOME UPSIDE DOWN?

Weary homeowners finding it tough to qualify for federally sponsored mortgage assistance programs are increasingly contemplating whether or not to consider the short sales route instead. While short sales have certainly assisted many homeowners in resolving their debt burdens, there are pros and cons to consider. Below are some of the most critical questions to answer before deciding whether to short sale your home or not…

1. Can you afford to keep your current home? Is your current economic situation a question or weeks or months/years? Depending upon your specific situation you may be able to delay or make partial payments for a few months by contacting your current mortgage service department. On the other hand, if you have been permanently downsized, disabled or are facing other longer term economic problems, it is a good idea to grapple with reality sooner rather than later; by addressing the problem early you have more choices.

2. Do you want to keep your current home? Sometimes situations change. Marital status, children leaving home (or coming home), job change, health or other events make a once desirable home little more than an ongoing headache. Evaluate your present property to make sure it is still a good fit before deciding whether to keep it or sell.3. Can you handle your other debt obligations? Short sales are often a great alternative to thos

e seeking to avoid bankruptcy or planning to restructure their debt obligations.

4. Do you owe more on the home than it is worth? Unfortunately, declining real estate values combined with variable interest rate loans, teaser loans or other hybrid mortgages have created a situation where many homeowners now owe more than the current market value of the home. In many cases, tens of thousands of dollars more. Make it a priority to determine whether it is worth the long term cost of paying down a high mortgage or saving for retirement, college and other expenses for the family.

5. Are you unable to refinance or gain more favorable terms? Not only have home values plummeted in many parts of the nation but rising unemployment rates, tighter lending standards and higher debt to income ratios caused by re-setting interest rates on ARMS have resulted in the perfect debt storm. Homeowners are increasingly unable to obtain favorable refinance terms.

6. Do you desire a relatively fast sale? Due to the downturn in the economy and backlog of existing home sales, there is a large inventory of homes on the market. Those that seriously wish to sell must price right and work aggressively to position their home for a fast sale. Many short sale investors are already pre-qualified and able to purchase the property as soon as the bank approves the offer. While a short sale isn’t “instant” (45-90 days), they are generally much faster than the current sales period for a regular MLS listing (6 to 12 months).

7. Do you want to avoid fixing the property in anticipation of a sale? Few things are worse than being forced to spend money in order to sell a property below the price you originally paid. Short sale investors routinely purchase properties in “as is” condition saving you the time and money required to put the property up for sale in the traditional manner.