Sell or Refinance for Less Than You Owe and Keep your Credit Rating

Most folks are aware the market values have been compromised lately.  However, you may not know that if you have to sell your home and you find that it may be worth less than you owe, it is possible to “Short Sale” your home even though you haven’t missed any payments.  When you do this your credit rating will be relatively unharmed by the sale.  Best of all, you can purchase another home in as little as 2 years after the sale and take advantage of these great prices. 

The banking industry recently permitted Active Duty veterans to short sale their homes while remaining current on their mortgage.  Many military personnel facing PCS (Permanent Change of Station) transfers, with security clearances were caught in a ‘catch-22’ with this market value decline.  They had to maintain good credit to remain in their jobs yet their home values dropped and they could not sell their homes for what they owed.  The most recent rules put in place by the banking industry allow Active Duty members to short sale their homes and remain current on their mortgages.  Formerly it was necessary to miss at least 3 payments to be allowed by banks to do a “Short Sale” and the credit rating of those people became significantly damaged.  Thankfully, having to default on the mortgage is no longer the case.  Now, it is possible to stay current on the mortgage and sell your home on a “short sale” and avoid paying any settlement (closing) costs.

This new provision is not just limited to active duty military.  The banks will approve a short sale with current borrowers as long as one of the following types of ‘hardships’ exist:  reduction in income, relocation (more than 50 miles) and changes in family situation such as divorce or an increase or loss of a family members. 

The worst case scenario is just letting the home to go foreclosure or giving the keys to the bank, called “Deed in Lieu of Foreclosure”.  Having to foreclose or giving the bank a Deed-In-Lieu of Foreclosure severely harms credit scores and means you cannot buy a home for at least 4-7 years. 

Many buyers are looking to buy right now because homes are much more affordable than previous years.  Buyers can buy a larger, nicer home for a lower payment and invest in home ownership at a great time. 

Mortgage interest rates are at historic lows.  So, if you do not need to sell and you have a mortgage, this is also the time to refinance.  There are certain programs where current borrowers can refinance, even if they owe more than the current market value and take advantage of the current record low interest rates. 

To view an on-line report and gain additional insight on a possible short sale, visit:

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