With the rise of falling home prices, home owners who have run into unforeseen circumstances, like unemployment, medical issues or divorce and can no longer sell their homes for what they owe.
As a result, short sales have become obligatory as opposed to foreclosure. But what becomes of the deficiencies?
After the banks foreclose or you decide to short sell, it's very common now to have large deficiencies with houses not worth the balances owed so banks have began to go after the borrowers and pursue a deficiency judgment.
Are You on the Hook for a Deficiency Judgment?
Whether banks pursue a deficiency judgment against the homeowner depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens on the home. But keep in mind, once the bank gets a judgment against you they can pursue you anywhere.
Generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.
Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes.
Lenders can pursue mortgage deficiencies in most states, however some states are non-recourse and don't allow deficiency judgments. But, even then, if the original loan was refinanced, some or all of it may still be subject to claims. In many cases, extinguishing the debt is often a matter of negotiating with the bank.
There are many lenders willing to release borrowers from further obligations but many borrowers are unaware that they have to ask for this type of release. So, if you are pursuing a short sale, be sure your attorney or realtor asks the bank to release you from any further obligation and get it in writing.
Will they or Won’t they file for a Judgment?
Many home owners feel they can finally breathe after a short sale or foreclosure; believing the worst is over. But judgments don't have to be obtained immediately; with so many unfortunate cases lenders are really overwhelmed so it’s taking them longer to reconcile accounts. They also may wait until they believe the debtors have recovered financially before they swoop in to recover whatever funds they can.
Once the court grants a judgment, the lender may have anywhere up to 10 or 20 years to collect, with interest.
Before agreeing and signing on the dotted line make sure all past and future liabilities are covered in your agreement.
Tuesday, December 14, 2010
Monday, December 13, 2010
Overcoming Buyers Remorse
The only way to overcome remorse is through Change;
Many home buyers suffer from buyer's remorse after they complete the closing on their brand new house. This is common not only because it represents a significant change in your life but many people buy with thoughts of grandeur only to succumb to reality after buying the home.
If you're suffering from home buyer's remorse, try to follow these tips to deal with the regret you feel.
Remember why you fell in love in the first place…
Oftentimes, home buyer's remorse is a result of new problems you find in a home, so try to remember why you thought it was such a good idea during your first tour. In most cases, your fears are just products of stress and worry, which are making small problems seem like big ones. Take a deep breath and search to overcome before it becomes a bigger headache.
Get to Re-Decorating:…
Perhaps you're experiencing home buyer's remorse because your house just doesn't feel like home yet. If you start decorating your house - new paint, new floors, new window treatments, new counter tops - it will start to look like a place in which you want to live. If you don't have the cash to replace things just yet, start putting your own pictures on the walls and knick-knacks on the shelves.
Stop the...Would have, Should have...Thinking…
A major pitfall that can cause home buyer's remorse is the continual scouring of the Internet for other, better houses. You can't return the one you just bought, so stop looking at listings on the Internet.
Sure, that other house might have a bigger master bedroom or prettier landscaping, but that isn't the one you chose to buy. You'll sink yourself farther into regret by looking at houses you just can't have.
Home buying is a major decision and every aspect of living in the home should be contemplated. Not just the financial aspects of your new home but think about the impact on your family - will you be happy living in that neighborhood, next to those neighbors, in that environment?
Keep in mind, change happens and you can overcome the feelings you have now. Whatever is bothering you now, you are able to change it for the better.
Many home buyers suffer from buyer's remorse after they complete the closing on their brand new house. This is common not only because it represents a significant change in your life but many people buy with thoughts of grandeur only to succumb to reality after buying the home.
If you're suffering from home buyer's remorse, try to follow these tips to deal with the regret you feel.
Remember why you fell in love in the first place…
Oftentimes, home buyer's remorse is a result of new problems you find in a home, so try to remember why you thought it was such a good idea during your first tour. In most cases, your fears are just products of stress and worry, which are making small problems seem like big ones. Take a deep breath and search to overcome before it becomes a bigger headache.
Get to Re-Decorating:…
Perhaps you're experiencing home buyer's remorse because your house just doesn't feel like home yet. If you start decorating your house - new paint, new floors, new window treatments, new counter tops - it will start to look like a place in which you want to live. If you don't have the cash to replace things just yet, start putting your own pictures on the walls and knick-knacks on the shelves.
Stop the...Would have, Should have...Thinking…
A major pitfall that can cause home buyer's remorse is the continual scouring of the Internet for other, better houses. You can't return the one you just bought, so stop looking at listings on the Internet.
Sure, that other house might have a bigger master bedroom or prettier landscaping, but that isn't the one you chose to buy. You'll sink yourself farther into regret by looking at houses you just can't have.
Home buying is a major decision and every aspect of living in the home should be contemplated. Not just the financial aspects of your new home but think about the impact on your family - will you be happy living in that neighborhood, next to those neighbors, in that environment?
Keep in mind, change happens and you can overcome the feelings you have now. Whatever is bothering you now, you are able to change it for the better.
Tuesday, December 7, 2010
10 Things You Should Not Do When Buying A Home
Even when you have great credit, there are things you can do to make lenders think twice about approving your mortgage loan.
Most people focus on the initial credit check when applying for a mortgage loan, but that's only the pre-approval stage; as underwriters scrutinize your history they'll ask for updated financial, employment and credit information.
There are plenty of things you should not do until you go to closing. Here's just a few:
1.Don't change your job before applying for a home loan. Along with that, now is not the right time to become self-employed or quit your job. You want to show lenders stability, which means you’ll be less likely to default on the loan.
2.Don't change banks; you want your history to show stability.
3.Don't buy a car or truck or any other form of transportation that you have to finance. Buying one increases your debt-to-income ratio and that's something loan officers don't want to see
4.Don't buy furniture on credit before buying your house. Like financing a car, charging big-ticket items increases your debt-to-income ratio and now is not the time.
5.Don't be late on your credit card payments or charge excessively. You need a track record of responsibility and show that you can manage your money.
6.Don't make large deposits into your bank accounts. Lenders like the money that will be your down payment to be sitting in your account for at least two months, what they call, seasoning;”so that the funds don't just appear out of the air.
7.Don't co-sign a loan for anyone. Even if you're not the one making the payments on that loan, it increases your debt-to-income ratio.
8.Don't have inquiries made into your credit. Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, it usually doesn't affect your credit score because the assumption is you’re rate shopping. But opening credit accounts within a short period of time represents some risk and your credit could take a hit. It's probably not a huge factor in your calculating your ability to repay a loan but why take a chance at this juncture?
9.Don't lie on your loan application. Sounds simple, right? But don’t leave out any debts or liabilities you have or fudge your income.
10.Don't spend your money savings meant for closing costs. Part of the price of financing a loan is the closing costs and you'll likely have some responsibility for paying them. Make sure you have enough for your share of the closing obligations.
It may be tempting to go shopping for wants and a few needs, but wait it out until the underwriting department has approved your loan application and you get the keys to your new home.
Most people focus on the initial credit check when applying for a mortgage loan, but that's only the pre-approval stage; as underwriters scrutinize your history they'll ask for updated financial, employment and credit information.
There are plenty of things you should not do until you go to closing. Here's just a few:
1.Don't change your job before applying for a home loan. Along with that, now is not the right time to become self-employed or quit your job. You want to show lenders stability, which means you’ll be less likely to default on the loan.
2.Don't change banks; you want your history to show stability.
3.Don't buy a car or truck or any other form of transportation that you have to finance. Buying one increases your debt-to-income ratio and that's something loan officers don't want to see
4.Don't buy furniture on credit before buying your house. Like financing a car, charging big-ticket items increases your debt-to-income ratio and now is not the time.
5.Don't be late on your credit card payments or charge excessively. You need a track record of responsibility and show that you can manage your money.
6.Don't make large deposits into your bank accounts. Lenders like the money that will be your down payment to be sitting in your account for at least two months, what they call, seasoning;”so that the funds don't just appear out of the air.
7.Don't co-sign a loan for anyone. Even if you're not the one making the payments on that loan, it increases your debt-to-income ratio.
8.Don't have inquiries made into your credit. Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, it usually doesn't affect your credit score because the assumption is you’re rate shopping. But opening credit accounts within a short period of time represents some risk and your credit could take a hit. It's probably not a huge factor in your calculating your ability to repay a loan but why take a chance at this juncture?
9.Don't lie on your loan application. Sounds simple, right? But don’t leave out any debts or liabilities you have or fudge your income.
10.Don't spend your money savings meant for closing costs. Part of the price of financing a loan is the closing costs and you'll likely have some responsibility for paying them. Make sure you have enough for your share of the closing obligations.
It may be tempting to go shopping for wants and a few needs, but wait it out until the underwriting department has approved your loan application and you get the keys to your new home.
Monday, December 6, 2010
Does Your 2011 New Years Resolutions Include Your Finances?
Many of us have the urge each year to seize control of our financial house but we really don't know where to start.
You know, those well intended New Year Resolutions that start off with a bang and fizzle out a few weeks later?
Well if you're finally fed up and ready to say,"the buck stops here"; then here are some critical steps to help you:
1. ATTACK AND PRIORTIZE YOUR SPENDING
Budgets are not your enemy! To rein in spending, follow these tips; for a month, write down every last penny you fork over, so you can figure out where the leak is. Then cut out those items you want, as opposed to truly need. Also, pay cash for almost everything, because using credit cards becomes so painless in the beginning but it can really hurt when you get the bill; yes, it's easy to rack up huge bills.
2. START SAVING EARLY
Consider this scenario; if you begin saving at age 25 and contribute $2,000 a year you'll end up with more than $315,000 in savings by age 65.
3. DIVERSIFY, DIVERSIFY, DIVERSIFY
Unless you can somehow read the future, you should probably hedge your bets and spread your wealth among numerous asset classes. That way, if one area tanks--the stock market, bonds, or real estate--you won't be wiped out, and the other sectors will mitigate your losses. Younger investors are content with a healthy percentage of higher-risk equities, because they can weather any temporary storms. Those closer to retirement tend to lean more toward safer bonds or cash.
4. STOP BUILDING DEBT
Admit it; you haven't done this very well; new cars, consistent weekend entertainment, clothing and more; sounds like splurging on all wants and very little needs. Cut out the things you really don't need.
5. PREPARE FOR EMERGENCIES AND BUILD UP SAVINGS
Building your emergency fund as well as long-term savings is a good plan to help you prepare for the future. You never know what might happen. And what would happen if you suffered a job loss? Millions of jobs have already been lost, and more are likely to be lost so, what is your back-up plan?
So, if you're still thinking about your upcoming New Year Resolutions, consider taking control and changing your financial future for the better.
You know, those well intended New Year Resolutions that start off with a bang and fizzle out a few weeks later?
Well if you're finally fed up and ready to say,"the buck stops here"; then here are some critical steps to help you:
1. ATTACK AND PRIORTIZE YOUR SPENDING
Budgets are not your enemy! To rein in spending, follow these tips; for a month, write down every last penny you fork over, so you can figure out where the leak is. Then cut out those items you want, as opposed to truly need. Also, pay cash for almost everything, because using credit cards becomes so painless in the beginning but it can really hurt when you get the bill; yes, it's easy to rack up huge bills.
2. START SAVING EARLY
Consider this scenario; if you begin saving at age 25 and contribute $2,000 a year you'll end up with more than $315,000 in savings by age 65.
3. DIVERSIFY, DIVERSIFY, DIVERSIFY
Unless you can somehow read the future, you should probably hedge your bets and spread your wealth among numerous asset classes. That way, if one area tanks--the stock market, bonds, or real estate--you won't be wiped out, and the other sectors will mitigate your losses. Younger investors are content with a healthy percentage of higher-risk equities, because they can weather any temporary storms. Those closer to retirement tend to lean more toward safer bonds or cash.
4. STOP BUILDING DEBT
Admit it; you haven't done this very well; new cars, consistent weekend entertainment, clothing and more; sounds like splurging on all wants and very little needs. Cut out the things you really don't need.
5. PREPARE FOR EMERGENCIES AND BUILD UP SAVINGS
Building your emergency fund as well as long-term savings is a good plan to help you prepare for the future. You never know what might happen. And what would happen if you suffered a job loss? Millions of jobs have already been lost, and more are likely to be lost so, what is your back-up plan?
So, if you're still thinking about your upcoming New Year Resolutions, consider taking control and changing your financial future for the better.
Friday, December 3, 2010
The Value of Your Front Door
Many homeowners invest a great deal of their time and money remodeling the interior of their home, keeping it repaired and up to date. A little time and attention spent on the outside of your home is also a good investment and a source of pride for many owners. You don't necessarily have to spend a lot of money to make the outside of your home look appealing; sometimes all it takes is a little time and effort.
The next time you're near the street, look at your house as if you were a stranger. Start with the yard; is it tidy and mowed regularly? Is the landscaping pleasing to the eye, and are the trees and bushes trimmed neatly? If so, you're doing a good job making your home a pleasing addition to the neighborhood.
Consider personalizing your home by planting your favorite flowers in strategic locations. Consider flowers of different colors and heights, mixing greenery and blooming plants to make the biggest impact.
Quite possibly the one most important feature viewed from the outside of any house is the front door and porch. The front porch provides the first impression to those who visit. Keep the porch clean and personalize the area with a potted plant or a seasonal wreath. Doors can be easily updated and repaired without being replaced, and it's well worth your time. Storm and entry doors should be clean, and torn screens should be replaced. Hinges should be clean and free of squeaks, and the door should swing smoothly. The elements of the weather will make any door dull and lifeless; regular cleaning and painting will restore its beauty. Consider using an accent color to provide even more appeal. You can update a door by replacing older door knobs with newer, stylish hardware. In less than one day, you can change the appearance of your home by spending a little time right outside your front door.
The next time you're near the street, look at your house as if you were a stranger. Start with the yard; is it tidy and mowed regularly? Is the landscaping pleasing to the eye, and are the trees and bushes trimmed neatly? If so, you're doing a good job making your home a pleasing addition to the neighborhood.
Consider personalizing your home by planting your favorite flowers in strategic locations. Consider flowers of different colors and heights, mixing greenery and blooming plants to make the biggest impact.
Quite possibly the one most important feature viewed from the outside of any house is the front door and porch. The front porch provides the first impression to those who visit. Keep the porch clean and personalize the area with a potted plant or a seasonal wreath. Doors can be easily updated and repaired without being replaced, and it's well worth your time. Storm and entry doors should be clean, and torn screens should be replaced. Hinges should be clean and free of squeaks, and the door should swing smoothly. The elements of the weather will make any door dull and lifeless; regular cleaning and painting will restore its beauty. Consider using an accent color to provide even more appeal. You can update a door by replacing older door knobs with newer, stylish hardware. In less than one day, you can change the appearance of your home by spending a little time right outside your front door.
Thursday, December 2, 2010
Sensible Living While Trimming the Fat
Not long ago, the idea of living well generally meant living large or, at least, as large as you could afford. The nations economic upheaval has changed priorities for many home owners and buyers, who are still focused on living comfortably but perhaps more prudently and efficiently than before.
So how do you continue to live well but live on less?
Slash and Stretch where necessary:
1.Give Up the Bottle and Introduce a Faucet Filter. Kill the bottled water and instead purchase a filter that can be installed on your kitchen sink. Reports tell us that most bottled water is not as sanitized as you would think you'll enjoy the same benefits from filtered tap water.
2.Cut your trips to cleaners in half. Most sweaters can go in the delicate cycle with some Woolite and most silks can be hand-washed and hung to dry.
3.Stop ordering movies off your cable channel, i.e. pay-per-view. Did you know that it costs more to order a movie from your cable provider than it cost to rent at your local video chain these days? There's an automated video vendor called Red Box and they only charge $1 per movie, per night. You can order 4 or 5 movies from Red Box for the same price as one movie on pay-per-view.
4.Re-think this summer's vacation. Put that Caribbean vacation on hold and take a road trip. You'll probably save 40%-60% and still enjoy your family time together.
5.Stay Away from the ATM. We tend to run to the ATM several times per week that adds up to over $20. Fees go to your institution for using someone elses ATM machine as well as the third-party machine you're using. At a combined rate of approximately $5 to $6 per transaction you can see just how much you may save by making one trip and obtaining enough to last all week.
6.Perhaps it's time to look at your auto and property insurance. Many times parents forget to call up their auto insurance agent to see if any deductions are available for teen drivers. Many insurance vendors have programs for first time drivers who complete defensive driving programs or after 6 months to 1 year of hazard-free driving. It never hurts to ask for discounts.
When you think about how much you spend each week and each month you can see everyone has some sort of money leak that needs to be plugged. The more we educate and learn how to rely on ourselves to overcome the more money we hold on to and the less debt we incur.
So how do you continue to live well but live on less?
Slash and Stretch where necessary:
1.Give Up the Bottle and Introduce a Faucet Filter. Kill the bottled water and instead purchase a filter that can be installed on your kitchen sink. Reports tell us that most bottled water is not as sanitized as you would think you'll enjoy the same benefits from filtered tap water.
2.Cut your trips to cleaners in half. Most sweaters can go in the delicate cycle with some Woolite and most silks can be hand-washed and hung to dry.
3.Stop ordering movies off your cable channel, i.e. pay-per-view. Did you know that it costs more to order a movie from your cable provider than it cost to rent at your local video chain these days? There's an automated video vendor called Red Box and they only charge $1 per movie, per night. You can order 4 or 5 movies from Red Box for the same price as one movie on pay-per-view.
4.Re-think this summer's vacation. Put that Caribbean vacation on hold and take a road trip. You'll probably save 40%-60% and still enjoy your family time together.
5.Stay Away from the ATM. We tend to run to the ATM several times per week that adds up to over $20. Fees go to your institution for using someone elses ATM machine as well as the third-party machine you're using. At a combined rate of approximately $5 to $6 per transaction you can see just how much you may save by making one trip and obtaining enough to last all week.
6.Perhaps it's time to look at your auto and property insurance. Many times parents forget to call up their auto insurance agent to see if any deductions are available for teen drivers. Many insurance vendors have programs for first time drivers who complete defensive driving programs or after 6 months to 1 year of hazard-free driving. It never hurts to ask for discounts.
When you think about how much you spend each week and each month you can see everyone has some sort of money leak that needs to be plugged. The more we educate and learn how to rely on ourselves to overcome the more money we hold on to and the less debt we incur.
Wednesday, December 1, 2010
Trust Your Agent
The single most important factor to consider when selling your home is the price tag. I'm sure you have a selling price in mind but is the price tied to an emotional value or have you made an educated decision? Perhaps you should leave the pricing to the professionals.
Why should you trust your real estate agent when selling a home?
Well, a real estate agent has access to information not available publicly that can help in pricing the home or determining if the asking price is fair. Agents have access to proprietary information, only shared by real estate agents.
This proprietary information includes the actual sales price of each home sold, not just the listing price. Additionally, the MLS information will include the number of days a home was on the market prior to closing. Both pieces of information are valuable in knowing how to market your home or evaluate the price.
Comparable pricing is still only one piece of the puzzle; there are other criterions a real estate agent will consider before settling on a fair market price.
Real estate agents also pay attention to neighborhood dividing lines and physical barriers such as major streets and freeways. You could live across the street from identical homes and the price could still vary by $50,000.
Realtors will compare similar square footage, within 10% up or down from your property and similar ages. One neighborhood might consist of homes built in the 1970s next door to another area of construction from the 1990s; values between the two will absolutely differ.
Pricing is also adjusted for lot size variances, configuration and amenities and upgrades.
These are all things a novice home seller would never consider. A real estate agent is trained to use part art and part science before settling on a fair market value of your homes worth.
Most of you will want a pie-in-the-sky windfall that includes every bit of money you put into your home. However, keep in mind, your feelings are more emotional than objective.
Pinpointing the fair market value will make a significant impact on the sale of your home. It could mean the difference upon a quick sale or hanging on for months waiting for a buyer.
In the end, trusting your real estate agent is crucial to getting your home sold faster and efficiently.
Why should you trust your real estate agent when selling a home?
Well, a real estate agent has access to information not available publicly that can help in pricing the home or determining if the asking price is fair. Agents have access to proprietary information, only shared by real estate agents.
This proprietary information includes the actual sales price of each home sold, not just the listing price. Additionally, the MLS information will include the number of days a home was on the market prior to closing. Both pieces of information are valuable in knowing how to market your home or evaluate the price.
Comparable pricing is still only one piece of the puzzle; there are other criterions a real estate agent will consider before settling on a fair market price.
Real estate agents also pay attention to neighborhood dividing lines and physical barriers such as major streets and freeways. You could live across the street from identical homes and the price could still vary by $50,000.
Realtors will compare similar square footage, within 10% up or down from your property and similar ages. One neighborhood might consist of homes built in the 1970s next door to another area of construction from the 1990s; values between the two will absolutely differ.
Pricing is also adjusted for lot size variances, configuration and amenities and upgrades.
These are all things a novice home seller would never consider. A real estate agent is trained to use part art and part science before settling on a fair market value of your homes worth.
Most of you will want a pie-in-the-sky windfall that includes every bit of money you put into your home. However, keep in mind, your feelings are more emotional than objective.
Pinpointing the fair market value will make a significant impact on the sale of your home. It could mean the difference upon a quick sale or hanging on for months waiting for a buyer.
In the end, trusting your real estate agent is crucial to getting your home sold faster and efficiently.
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