Last week I took additional course work on short sales. We don’t really anticipate seeing many foreclosures this year because the banks are beginning to work with their customers to stave them off. This year will see short sales. The Alt-A loans are almost all gone and now what will be coming up are some loans that should affect our market. The people who purchased homes in the mid to late 2000’s and who took out ARMs of 5 or 7 years are going to see them resetting this year. If they reset now, they’ll reset for lower then the original rate for the first year only. Should they reset once the Fed plays around with interest rates, then who knows how they’ll reset so they might be higher. How do I know this? Take a look at this great chart from Credit Suisse. We are currently in month 36 where the arrow is. You can figure it from there, that we anticipate seeing a peak number of short sales by the end of the summer, September to be exact.
If you are one of the multitude of homeowners sitting with this kind of mortgage you have a couple of choices. First, refinance it immediately. Second, if you are unable to do so, get your home ready for resale and get it on the market this spring. Yes, it will be under water, and yes you will need to go through the process of applying for a loan modification with your lender. If you are denied, as most appear to be, ask for a short sale and find a Realtor with suitable experience and training to help you. We are CDPE trained and SFR trained. These are the Cadillac of certifications for short sales. Do not wait to sell, get ready to do it this spring because there will be much competition for short sales.
Another consideration for you. If you sell you home in a short sale, you can buy a new one within 90 days using a conforming FHA loan. This means you will be in a home around $900,000 and there are many to select from in our area. You may have to swallow your pride in reducing your home size and location but at least you can still own a home without the tax ramifications of a foreclosure.
Do you want more information on how to do this? We’re here to answer your questions so go here for more help.