Over the past weeks we have seen data that suggests short sales have been a more popular choice among many homeowners and for banks when it comes to helping alleviate the burden of foreclosed properties in the housing market and on the books of many banks as some of these institutions have countless home sitting empty and wish to avoid adding to this inventory. However, despite the fact that short sales are becoming more widely used, officials are still urging homeowners to look into how a short sale will impact their financial life and, when it comes to buying short sales, there have also been some problems which have arisen despite the fact that banks are attempting to work with homeowners and buyers to make these transitions in a more timely manner.
Yet, when it comes to the short sale alternatives homeowners have options that range from working directly with their servicer to programs like the federal Home Affordable Foreclosure Alternatives initiative which offers short sale and deed in lieu of foreclosure opportunities to homeowners in a difficult financial position who are unable to pay for their mortgage. In many cases, homeowners are seeing short sales as a way to escape their negative equity situation but homeowners also are being urged to remember that this can do damage to their credit score, which would make reentering the housing market more difficult and push the ability of a homeowner to purchase a new home down the road a little further.
However, some homeowners have become so frustrated with their mortgage situation that damage to their credit score is not something that is preventing them from pursuing these short sales, as they have offered some benefits to homeowners who are facing an underwater home loan, financial difficulties, and are offered the opportunity to escape these situations without applying more money towards a home that has been a drain on their finances. Obviously, some homeowners who view their home as an investment are in a position where these short sales can be greatly helpful, but again they have not always been smooth in terms of transitioning a homeowner from the property.
There are some buyers who are looking at short sale properties as they can come at a much lower cost, which coupled with price reductions that have been seen and mortgage rates that are still quite low, despite a recent increase, these new buyers have seen short sales as a way to potentially get an affordable home with an affordable mortgage. Yet, short sales have taken a great deal of time in some cases, which is obviously frustrating for buyers but some homeowners who have attempted to work out short sale agreements are in a position where they must get their bank’s approval and will hopefully have a buyer who will go through with the agreement.
Despite the fact that many banks are working to find buyers, help homeowners participate in these short sale programs, and avoid more foreclosures, homeowners do need to remember that a short sale is not always a guarantee nor will it be beneficial for their financial life in many cases, so a great deal of attention is often advised when it comes to how this particular alternative program will impact a homeowner’s life before a homeowner abandons pursuing foreclosure prevention programs in exchange for one of these alternatives.