4 Ways to Sell 4 Less and Survive !
In the current Real Estate Market many homeowners owe more than what their home is worth. This is commonly referred to as being " upside down". Listed below are 4 ways in which an owner can sell their home for less than the mortgage balance except in the case of the VA Assumption. Some of these methods will effect your credit and some will not. The most frequently asked question by sellers is "will the loss that the bank takes become a tax liability for me?" some of these questions can be answered by clicking here to read the IRS Mortgage Debt Forgiveness Act. Please feel free to call me anytime for a confidential no obligation consultation to discuss your selling options.
Option # 1 VA Compromise Program
This program is designed to help Veteran Homeowners who currently have a VA Mortgage. The Veteran has to submit a financial statement and a hardship letter. Falling home values , divorce , job loss and medical reasons are the most common submitted. Your mortgage company will order an appraisal to determine fair market value. If approved the loss (including closing cost and commissions) will be absorbed by the Lender/VA against your Va loan eligibilty. You are not required to pay the loss unless you want to reinstate your Va loan eligibilty. Call me for more details as I have settled several compromises over my 28 years ! To view the 28 page guide for the VA Compromise Program Click Here
Option # 2 Hap Program (Homeowners Assistance Program)
If you are a Servicemember , Federal Employee , member of the Coast Guard , or a U.S. citizen nonappropriated fund employee having to move due to a BRAC base closing you may be eligible. You must own or have owned your home near that military installation at the time of announced action. You will be or have been obliged to move away to obtain new work , are reassigned to another area or are involuntarily unemployed. To read the Application and Guidance Package CLICK HERE
Option # 3 VA Assumption
The Va Assumption is a much simpler process where a Veteran substitutes his or her Va Loan Eligibilty for yours. After closing you can send your Hud 1 settlement sheet to the VA for a reinstatement of your VA home loan eligibilty. There is no Appraisal requirement and because there is no new loan being created closing costs are lower. The VA charges a fee of 1/2 % of the loan amount and a $ 300 fee. The existing escrow account set up for taxes and insurance remains in place and becomes the new owners account. It is up to you and the new owner to negotiate whether not you are compensated for it or you simply pass it on. What might make this more attractive to a buyer is that they may be able to assume a lower mortgage interest rate and payment now that interest rates are heading higher. I have done several of these transactions over the years. Again call me with any questions. To view the VA Form 26-6381 ( Application for Assumption Approval) CLICK HERE To view important guidelines for VA Assumptions CLICK HERE
Option # 4 Short Sale
The Short Sale process is more complex and time consuming although recent Federal Lending Law Changes that go into effect April 2010' will shorten the timeframe in which a lender has to respond to you! A Short Sale is a sale that takes place prior to Foreclosure. The Lender requires a financial statement, monthly bank statements, a monthly budget, a hardship letter , a copy of the sales contract, a copy of the listing agreement, a copy of the MLS listing and a preliminary Hud 1 settlement statement prepared by the closing Title company to show the Lender the estimated net to them if they approve the sale. After this is submitted the case is assigned to a Short Sale Negotiator.
I have and I am currently dealing with Short Sale cases and would be glad to answer any of your questions.
