Through our experience handling distressed properties at Russ
Lyon Sotheby's International Realty, we found that homeowners
in Flagstaff today
have more questions than answers about their circumstances. We
have created this site to help you understandthe
possible solutions
to foreclosure, as well as provide a detailed explanation of short
sales, which may be the best course of action for
some homeowners in Flagstaff Arizona.
Flagstaff, AZ Real Estate Trends
You may also have noticed that we are offering you a FREE Report
to explain your options and help you decide on a course of action.
The idea of losing a home can be overwhelming, and we feel it is
vital for you to have all the facts necessary to make an informed
decision.
As agent's with the CDPE® Designation, we have a strong and unique
appreciation of the factors affecting the market, and know that
there are options available to you.
If you would like to know more about your options, please call Annette at (928) 607-3808.
STOP. DON'T WALK AWAY FROM YOUR MORTGAGE.
A recent study estimates 36% of Americans think walking away is a viable option when they owe more on their home than what it's worth. Clearly, few know the financial consequences of these actions. Even fewer understand the options available to them.
If you or someone you know in Flagstaff AZ is at the crossroads of deciding whether or not to walk away or "strategically default," you'll find nothing strategic about foreclosure, especially when there are solutions to avoid it.
GIVING THE GREEN LIGHT TO FINANCIAL STABILITY.
Fortunately, there are options to avoid foreclosure and protect your financial future. From short sales and loan modifications to renting your home, it's vital that you know what you can truly do to avoid the financial damage of foreclosure.
Most homeowners who decide to strategically default face the burdens of:
• Credit issues
• Current employment challenges
• Future employment challenges
• Issues with security clearance
• Possible debt collections
• And more
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Short Sale and Foreclosure Effects on Credit
Sellers may wonder whether doing a short sale would affect their credit less than completing a foreclosure, and
whether there are other advantages between the two. While in foreclosure, and depending on state laws, a seller
could possibly stay in the property, essentially rent free, for four months to a year before being forced
to vacate. But that fact alone does not mean a foreclosure is better.
Whereas a short sale involves offering the home for sale, generally listed through Flagstaff MLS. Potential home
buyers will make appointments to view the home, some will make lowball offers, agents might hold open houses and,
in general, a seller's life will be disrupted, all in the hopes that a buyer will buy the home.
Basics of a Short Sale
Short sales happen when a lender agrees to accept less than the amount owed against the home because there is not
enough equity to sell and pay all costs of sale. Not all lenders will negotiate a short sale, and that is why a
real estate agent or a lawyer can be a tremendous help by contacting the lender's loss mitigation department
to find out.
You can't just wake up one morning and decide you're going to sell your home at a loss by asking for a short sale.
It used to be that lenders wouldn't even consider a short sale if your payments are current, but that has changed.
However, realize that lenders will be more agreeable to negotiation if your payments are in arrears.
Plus, if you have cash assets, the lender might try to tap those accounts.
How is a Short Sale Seller's Credit Affected?
Fair Isaac released a report that says credit scores are affected about the same, whether a seller does
a short sale or foreclosure. Fair Issac says the average points lost on a FICO score are as follows:
30 days late: 40 to 110 points
- Foreclosure or Deed-in-Lieu of Foreclosure
Both of these solutions affect credit the same, says David Steep of Vitek Mortgage.
Sellers will take a hit of 200 to 300 points, depending on overall condition of credit.
This means if a seller's FICO score before foreclosure was 680, it could dip as low as 380.
- Short Sale
Steep maintains that the effect of a short sale (providing the sellers are more than 59 days late)
on a seller's credit report is identical to that of a foreclosure. The ding on credit will show up
as a pre-foreclosure in redemption status, Steep says, which will result in a loss of 200 to 300 points.
This means a short sale seller with a previous FICO of 720 could see it fall from 520 to 420.
Waiting Period Before Buying Another Home
- Foreclosure or Deed-in-Lieu of Foreclosure
Steep says a seller who wants to buy another home after foreclosure will end up waiting
about 24 to 72 months before a lender will offer any kind of interest rate that makes sense.
- Short Sale
Some agents say the good news for short sale sellers is the wait is much shorter before buying
another home, and Fannie Mae guidelines in 2008 adopted new procedures.
Can a seller buy again in less than two years? Not really, says Coy, "It's an utter myth that a
consumer 'can buy again in about 18 months at a good interest rate.' However, Fannie Mae guidelines
now require only 24 months' seasoning, and that's good news for agents who specialize in short sales."
FHA adopted guidelines in 2010 that say a seller who is current and does a short sale may qualify to
immediately buy another home. Lenders aren't so quick to follow those guidelines. However, Flagstar Bank
gave an Elk Grove short sale seller a new loan within 2 months of closing his short sale, and that seller
was current at the time.
Note that Fannie Mae guidelines allow a seller to immediately apply for a new loan to buy another home if
that seller kept the payments current, had no delinquencies exceeding 30 days and did not agree to repay
the debt relief. Moreover, it's the late payments that dramatically affect your credit report, not the short sale.
