My father-in-law brought an article in Bloomberg to my attention recently. see http://go.bloomberg.com/market-now/2014/03/06/household-wealth-hits-record-savings- still-lo/) Long story short; the housing market has rebounded and equity is starting to grow. Each month, instead of paying rent, you are adding to that “savings account” that you sleep in.
Housing Market Back Up
The housing market across the country is back to where it was before the crash. Colorado hasn’t seen as big of a rebound as other parts of the country, but we didn’t see as much of a decline either. There are fewer foreclosures and fewer homes on the market. If interest rates stay were they are, I expect housing prices to climb higher this spring and summer. If you have some property to sell, this spring should be a good time to sell it. If you have a higher rate mortgage or an adjustable rate mortgage, now is the time to re-finance into a better loan. More and more home owners are now able to re- finance, and even pull money out.
What to Know About Short Sales
Even with a stronger housing market and fewer foreclosures; I still get lots of questions about doing short sales. It’s a position no homeowner wants to find themselves in: having to sell their home at a loss. Known in the real estate trade as a “short sale,” the situation occurs when the proceeds of a home sale fall short of what the seller still owes on the mortgage.
As depressing as this scenario might sound, it certainly beats the most common alternative: foreclosure.
Homeowners can find themselves in this situation by putting very little down on the house when they bought it, not staying on top of needed repairs, taking out sub-prime loans with rising mortgage payments, or removing a lot of equity through home-equity loans.
Many circumstances such as divorce, illness, unemployment or raising mortgage and tax payments may make it impossible for a homeowner to stay on top of mortgage payments.
Technically, any amount of debt that the bank forgives is considered taxable income in the eyes of Uncle Sam. But there are laws and situations that are designed to negate this tax. Please talk to me, your attorney or CPA for more info on debt forgiveness.
Something else to consider: Let’s assume you purchased a home for $250,000 and were compelled to sell it for just $200,000. That $50,000 loss is not tax deductible if it was a principle residence. Still, doing a short sale is far better than being dragged into foreclosure. Not only does a homeowner have to suffer the hardship of being evicted from his or her own home, foreclosure significantly impairs one’s credit. The inability of a borrower to keep up with house payments, inarguably one of the most important personal financial obligations, would prove a huge red flag to any potential future credit providers and even future employers.
Foreclosure would be the last thing a homeowner wants to happen. A short sale is a much better option for so many reasons.
While short sales and foreclosures are becoming less common in this housing market, they are still happening in large numbers and are still having a big effect on the housing market. Here are some alternatives for those that are facing this tough situation.
Consider, for example, taking in boarders, renting out the home or borrowing money from family to weather a temporary financial crisis. If a short sale or foreclosure seems imminent, talk to your lender as soon as possible. In some situations, banks may be willing to lower interest rates or reduce monthly payments if that will help you stay in the house. This is called a loan modification.
If you find yourself unable to keep up with your mortgage payments, follow the advice of the U.S. Department of Housing and Urban Development (HUD):
- Contact your lender as soon as you realize there is a problem
- Open and respond to all mail from your lender
- Study the foreclosure laws and timeframes in your state
- Contact a HUD-approved housing counselor by calling (800) 569-4287
- And most importantly, contact me to discuss your many options
Bonus Step: Call or Email Us
Call or email us at 303-941-4823 / RDRealty@richdavis.com for a one-on-one personal and private consultation. I’ve helped hundreds of people in different situations and we know what it takes to help you. We have many different options to discuss with you. Ask for my free report called “10 Solutions You Should Know If You Are Behind On Your Mortgage Payments”. If you know of anyone facing this situation, there are ways to help. Don’t ignore the problem! It won’t do away on it’s own!
Can We Partner On a Property?
I am looking for more properties to buy, for both myself and for others. If you know of a vacant property in your neighborhood, or a bank-owned or pre-foreclosure, or a For Sale By Owner or know of someone looking to sell a home; please let me know. We can partner on the purchase. I get more leads and you get cash; it’s win-win.
If you or a friend are interested in investing; either time or money, I can help. You can even use an IRA to invest.
Wondering How Much Your Home Is Worth?
If you’re wondering what’s happening to prices in your area, or you’re thinking about selling your house, I can help. Give my office a call for a no-fuss, professional evaluation. Or Click Here for an online Form I won’t try to push you into listing with me or waste your time. I’ll just give you the honest facts about your home and its value. And maybe I’ll also give you the “inside scoop” on what’s happening in the housing market near where you live! Just give my office a call or send an email to arrange an appointment. Alternatively, stop by at the office.
As always, I hope that you have learned something new today. If so, please share this newsletter with a friend. If there is anything that I can do to help you or a friend, please let me know.