Should I Short Sale My Home?

That is a question that many financially strapped Sandy Springs homeowners are debating right now. Clearly, they’re finding it difficual to qualify for federally-sponsored mortgage assistance programs covered under the Making Home Affordable program.

Over 500,000 homeowners have qualified for a modification, with little over half actually agreeing to a temporary modification and just a little over 1,700 actually receiving permanent modifications.

Short sales have helped many homeowners in resolving their debt issues, but there are pros and cons to consider. Below are some of the most important questions to consider before deciding whether to short sale your Sandy Springs home or not…

1. Can you afford to keep your current home? This is relatively a simple question. Because if you can afford to keep your home, then why wouldn’t you? Depending on your specific situation, you may qualify for a loan modification. Is your hardship temporary? Are you struggling to make the payments today, but may be fine in just a couple monthsl? If your hardship is more of a permanent nature due to loss of job or disability, then a short sale may be something you need to consider.

It’s important to be brutally honest with yourself. I’ve had many clients who have pulled out all of their funds from retirement accounts to try and make their payments, but when those funds ran out, their option was to do a short sale. A little foresight goes a long way in protecting yourself.

2. Do you want to keep your current home? Whether from a change in marital status, children leaving home or moving back in, a job change or health related issues or other events, sometimes you may no longer want to keep your home. You’ll need to evaluate your present accomodations to make sure it is still a good fit before deciding whether to stay or sell.

3. Can you handle your other debt obligations? Short sales are often a great alternative to those seeking to avoid bankruptcy or foreclosure.

4. Do you owe more on the home than it is worth? With home prices declining and many teaser rates or interest only mortgages automatically adjusting, many homeowners now owe more than the current market value of their home. For some, we’re not just talking about tens of thousands, but into the six figures. It should be a priority to determine whether it is worth the long term cost of paying down a high mortgage or saving for retirement, college and other expenses for the family.

5. Are you unable to refinance or gain more favorable terms? Not only have home values dramatically declined in many parts of the country, but rising unemployment rates, tighter lending standards and higher debt to income ratios caused by re-setting interest rates on ARMS have resulted in the perfect storm in the lending world. Homeowners are increasingly unable to obtain favorable refinance terms. The biggest issues for most homeowners is that their home won’t appraise high enough for them to refinance without putting more money down.

6. Do you desire a relatively quick sale? Due to the decline in the economy and surplus of existing home sales, there is a large inventory of homes on the market. Those that really want to sell must price right and work aggressively to position their home for a quick sale. While a short sale isn’t “short” (typically 60-120 days), they are generally much faster than the current sales period for a regular MLS listing (6 to 12 months). Contact your Sandy Springs Realtor to understand the stats!

7. Do you want to avoid fixing the property in anticipation of a sale? Few things are worse than being forced to spend money in order to sell a property below the price you originally paid. Short sales are generally sold “as-is” which keeps you from spending more time and money necessary to put the property up for sale in the traditional manner.

Aaron Hofmann, a Certified Distressed Property Expert and a local Keller Williams Sandy Springs Realtor, is available for financially burdened homeowners to discuss their situation in confidence. Additionally, if you’d like to learn more about short sales, check out our Atlanta short sale resource.

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