Nowadays many homeowners have fallen behind on their mortgage payments for a wide variety of reasons such as unemployment, family emergency and/or toxic loans. Aggravated by the recent financial crisis, many find themselves underwater; that is, they owe more that the actual cost of the house. Burdened by one or more of the aforementioned hardships, owners are forced to loose their homes.

An example is someone that owes $330,000 and at the time of purchase brought $80,000 as a down payment for a total of $380,000. With the market crash, the property could be sold at $200,000 leaving the homeowner with a loss of $180,000. A loss that could take several years to recover plus an excessive loan payment in comparison with what the houses in the same area are worth.

As mentioned before, if in addition to the prior example, the homeowner is not able to pay the house anymore because of a loss of income, he would have to decide if it is better to do a short sale or a foreclosure. A short sale is the process of hiring a Real Estate agent to put the property for sale before the bank forecloses. The benefit of doing it is that the credit of the homeowner won’t be severely damaged and will only show late payments instead of a foreclosure. The latter will affect the person’s credit for seven years hindering the ability to get a new house in several years; meanwhile if the homeowner decides to short sale the property, he could buy a new house in a shorter period of time.

Every situation is different and needs a more deeply look; contact me so I can help you find a solution if you or someone that you know is facing a situation like this.

Juan P Garcia
http://calljuan.com
800-893-5062