What is a Short Sale Home? In Layman's Terms Please!

What does it mean when a home for sale is a "short sale?"



Over the past few years and as the popularity of "short sale homes" have increased their presence on the market, I have been increasingly at fault for utilizing the technical term "short sale" in conversations with enough home buyer's and seller's to detect just how unfamiliar the general public is with the definition of a "short sale". I am also somewhat chagrined to use such jargon without further explanation when I pride myself on being a clear and patient communicator with my clients in order to ensure their comfort during the normally stressful home buying / selling process.



Which leads me to the explanation of why I decided to write this article in layman's terms with the intent of offering the clarification geared toward the average home buyer who is often intimidated enough by the home buying experience independently and unaccompanied by additional complexities like the current unusual conditions such as "short sales", "foreclosures" and other atypical circumstances real estate transactions are beset with currently in the market.



* • Q: What does it mean when a home for sale is a "short sale?



A: A home listed for sale is considered a "short sale home" when the home being offered for sale is offered for sale at a listed price which is actually less than the amount the owner/seller of the home owes on the loan(s) attached to the home.



For example, let's say you purchased a lovely three bedroom two bath pool home in the year of 2005 for a sale price of $300,000 (which at that time was the fair market value), and let's say you paid 10% of the purchase price as your down payment, acquired a loan/financed from your bank the 90% ($270,000) remainder to complete the purchase. Now fast forward and you arrive here in the year 2009.



Just this week you learn that you must sell your home immediately because you are being transferred from Florida to California for work related reasons.



At this time you get over the initial panic and decide to call your local Realtor/Sales Associate in order to get a consultation to go over the sale of your home. As you are sitting at your dining room table with your spouse and your Realtor ,your real estate agent with a calm but concerned demeanor reviews the comparable market analysis to determine the price that your home would likely sell today, you are then informed that you will be lucky to sell your beautiful three bedroom, two bath, pool home for $150,000 in today's market.



Your immediate reaction is, "What? How is this possible?." (or maybe something more colorful), you realize that due to the fact that you still owe $200,000 in remaining principal to your bank, which means that without taking any other closing expenses into consideration you will need to bring a check in the amount of at least $50,000 to fork over to your bank at closing! What are you going to do you wonder?!



Your options seem little as you have no choice but to relocate where you were assigned by your employer, you wonder what options do you actually have? Luckily, a few options do exist for a seller in this position.



The solutions I have most often seen occur are either, the seller brings the remaining $50,000 check to closing and pays the owed amount to their bank/third party, or if the seller cannot afford to make good on the difference at this time and only under certain circumstances the bank/third party will then issue or agree to separate arrangements for the remainder of the deficiency to be paid back after the sale of the property or release the seller from the full or partial liability of the deficit.



The buyer on the other hand is able to purchase the home at today's market value of $150,000 regardless of the fact that you had a loan of $200,000 still owed prior to the sale.



* • Q: Who can sell your home as a short sale? Who pays the closing cost to your Real Estate broker and other expenses?



A: A licensed Real Estate broker can in most situations sell your home as a short sale if your individual circumstances meet the criteria necessary, which are mostly determined on an individual basis and by you and any third party to which payment of loan is owed - usually one or more bank(s).



Your Real Estate associate/broker can also at times assist you in preparing and/or delivering the appropriate documentation to be submitted to the necessary third party(s) in order to have your situation reviewed, analyzed and possibly approved for selling your home as a short sale. The payment of services provided by your Real Estate broker, your Real Estate lawyer and your CPA can also at times be paid by the third party(s) holding the loan(s) owed on your home.



* • Q: Can investors/ owners of a second home also sell their property as a short sale?



A: Without getting too in depth the answer is, Yes under certain circumstances.



Because each seller's situations is unique it is best to have your individual circumstance evaluated by your local Real Estate associate/Realtor who has experience and knowledge in the area of short sales and to also consult with your Real Estate Attorney and CPA for any legal and/or tax advice.



If you are wondering whether a short sale is an option for you and you are inquiring in reference to Florida Real Estate or if you just have additional questions or comments please email me at Jamie@jamiesellsstpete.



com . As a Realtor/Sales Associate with RE/MAX Metro in Saint Petersburg Florida I am here to answer Florida specific Real Estate questions.



The purpose of this article is to provide an explanation in a brief non technical summary format in reference to the short easy to understand definition of a short sale with regard to home sales in FL and FL Real Estate and should not be construed to imply legal, tax or situational advice. For legal or tax questions please consult your attorney or CPA respectively.

Online Mortgage - Tools Of The Internet To Help Get The Best Home Loan

Online Mortgage - Tools Of The Internet To Help Get The Best Home Loan It is relatively easy to apply for online mortgages.http://first-mortgage-quote.blogspot.com ÂThe Internet is a wonderful tool to use when looking for the best deals in online mortgages. There are many online mortgage lenders who offer competitive packages. Many websites even offer free online mortgage quotes for you if you are on the look out for great online mortgage deals and loan programs.



Aside from that, some websites offer free online mortgage calculators to help you estimate the costs and savings of a particular loan. Online mortgages have made it possible for consumers to stay involved in their mortgage dealings. With traditional mortgage lenders, not enough information might be passed on to the customer. Getting online mortgage information is easy and quick. This is one of the reasons why an online mortgage application is preferred by borrowers.



An online mortgage application may even be the best way for you to get the mortgage that suits you perfectly. Online mortgage brokers charge lower fees compared to traditional brokers. Rate of online mortgages are also updated everyday, thus keeping you aware of the movements of interest rates. An online mortgage application takes about 4 minutes to finish. And approval for an online mortgage is given within 24 hours.



In this regard, applying for online mortgages reduces the time spent. An online mortgage application is a streamlined process, thus letting you cut down on paperwork and glut as well. But despite the many benefits of online mortgages, a lot of people remain hesitant to apply for an online mortgage. Because of the faceless nature of online mortgages, people find it hard to keep their trust on the transaction. Yet, despite the low volume of online mortgage applications, recent events in the economy have caused an increase in the online mortgage activity.



How Does Online Mortgage Work? In applying for an online mortgage, the task is pretty simple. Online mortgage applicants are given a quick form to fill up. These online mortgage application form will ask for their personal details, including name, address, and contact number. An online mortgage application form may also require some loan information details, like the amount of loan, interest rate desired, and type of loan.



Once these online mortgage applicants send in their details through the Internet, a loan processor will review their application. Upon approval of the online mortgage application, customers are contacted via phone. Free Online Mortgage Calculators To Help If you are simply shopping for online mortgages or comparing prices, the Internet also features several online mortgage calculators that are offered for free.



These free online mortgage calculators may be used to determine your amortization schedule. Free online mortgage calculators can also be used to calculate the monthly payments of each type of loan, total interest yield, and total costs. Some free online mortgage calculators even have special features that would help you estimate the amount of savings you can gain from a particular loan.http://first-mortgage-quote.blogspot.com

Online Mortgages: The Good, the Bad, and the Useless

You're ready to buy your first home, but where do you start the

search? Well it would seem today the best place to start would

be in the online market; the online market offers some of the

most competitive interest rates are valuable and you can apply

right from the convenience and privacy of your home.



Does this mean that the online process is just 1,2,3.. and

you're ready to buy? No, this means the online community is one

of the better places to start. This article will take a look at

the good, the bad, and the useless.



Not every web site is your

key to your new home; not every web site is what it claims to

be. Why don't we start with the tools that are available for the

novice buyer and then move into the online programs that are

valuable, and finish up with the online mortgage companies?



Many of the advertised web sites do offer really useful tools

for a novice buyer in order to prepare them and determine

eligibility levels. Tools such as the mortgage calculator, the

debt to income ratio calculator, and tools available that will

determine the mortgage products that are obtainable based on

your input of information are really helpful and do actually

provide the potential homebuyer with working information.



Normally, all of the major web sites will provide access to

these tools through the use of hyperlinks; some even offer to

calculate home value based on your location.



The most useful and perhaps the most often offered a tool for

the perspective homeowner is the application form to pre-qualify

and to have a representative contact you. There's nothing like

talking to another person, especially one that is a specialist

in the mortgage industry, in order for you to determine what you

actually will qualify for and what you might actually want to

buy.



What other options and tools are available on these web sites?

Another useful and often overlooked tool is the link that will

provide you with access to your credit file. More often than

not, a young person tries to pre-qualify for a mortgage product

and there is no existing credit history, there is no established

credit score, therefore there is no hope of obtaining a

mortgage. At least not without a cosigner. But if you're a

beginner, and you take the time to visit web sites you can gain

access to information before it's necessary to have established

plan.



This in itself puts you one step ahead.



What would fall under the classification of "bad"? Here's the

only item that I can truly file as a bad side effect of and

online mortgage quest: your name and information is shared with

all other online lenders and at some point in time your phone

will ring and a telemarketer will asked to speak with you, in

order to sell you a mortgage. Now, a mortgage is not really

something that you impulse buy, therefore I believe this to be a

waste of time for you, the telemarketer, and the online mortgage

company.



What falls under the "useless" category: the web sites that

offer to find bidders to bid and compete, for your mortgage

business. First of all they don't gather enough information to

actually compete for anything; not what mortgage company is

willing to submit a bid for your business until they check your

credit file, are familiar with your credit score, and know

something about the property you're proposing to buy.



Now why would you even advertise like this? Well the answers

really simple these web sites that offer to recruit mortgage

companies that will be it for your business are telemarketers in

disguise.



That quite obviously earn a commission for every lead

they provide for a mortgage company, and you are simply

providing information to be one of their leads. It's really a

simple way to search for and locate live leads, and it really

does save a lot of live telephone time. So there you are a

general overview of the online mortgage market, the good, the

bad, and the useless.

Home Mortgages: Does a No-Closing-Cost Loan Make Sense for You?

I have heard a number of radio ads and have seen many newspaper ads offering "no closing cost" home mortgages. These ads will tell you that you can get a new mortgage or refinance your existing mortgage at absolutely with absolutely no closing costs.. There are no points, no charges for an appraisal, no charge for title insurance, no costs, period.

On the face of it, this sounds like a great deal and no-cost mortgages are especially popular with people who are refinancing an existing mortgage.



How does this work? Normally, a 30-year, fixed-rate mortgage, would have closing costs in the neighborhood of $2,000 to $3,000 or even more, depending on whether or not you pay points upfront. In fact, we talked to one mortgage broker two weeks ago about a mortgage on an investment property we own in another state and the closing costs were quoted as $7,000 - outrageous but at least not typical.

You've probably heard the old adage, "there is no such thing as a free lunch," and these no-cost mortgages are yet another testimonial to the truth of this.



The way that no closing cost mortgages work is the lender gives the mortgage broker a rebate at closing which the broker then uses to to pay the settlement costs. The way the lender gets its money back is by charging a higher interest rate. For example, for a $230,000, 30-year fixed rate mortgage with no upfront fees, your interest rate would most likely be a least 0.35% higher that if you paid one point and the customary closing costs.

Here's an example of what this means.



As of this writing, there were mortgages available at 5.250 %, plus one point. As you probably know, one point equals one percent of the mortgage so one point on a $150,000 mortgage would be $1,500.

The monthly payment fo this loan, excluding taxes and insurance is $826.00. The closing costs would be $1,500 plus the normal settlement costs of, say, $1,500,A for a total of $3,000.

Let's compare this with a no-cost mortgage. Assuming the interest rate is 0.



35% higher as quoted earlier, the interest rate on a 30-year, fixed-rate mortgage would be 5.725%, yielding a monthly payment of $872.98 or about $46.00 per month vs. the loan where you would pay one point and the normal settlement costs.

Given a savings of $46.00 per month, it would take you about 65 months - or 5.5 years to make up for the $3,000 you paid in closing costs. This means that you need to determine how long you will stay in that house before deciding on a mortgage loan or a refi.



If you intend to stay in that home and not refinance your mortgage for more than six years, it might make sense for you to pay the point and the normal settlement costs. On the other hand, if you believe you will sell that house or refinance it in less than five years, a no-cost mortgage might be better.

Just make sure you look at all the various alternatives and their long-term costs before you leap into a new mortgage.

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.. and its free! To learn more about this amazing new technology, just go my Web site, http://www.hd-radio-home.com, to get all the buzz. Douglas Hanna is a retired marketing executive and the author of numerous articles on HD radio and family finances.