“Short Sales” is the hot catch phase these days in Florida. Everyone in Real Estate and Mortgages talks about them… and for different reasons.

As a Florida Mortgage Professional, I get calls and emails all the time from worried homeowners wondering if they should start Short Sale Proceedings.

There are a few ways to decide whether it is worth it or not.

You see… a Short Sale is a method for reducing your debt. It is NOT Free though. It has its costs and they are not all short term.

The most obvious negative effect is to your Credit. A Short Sale is a derogatory. That means that you will have significant damage done to your credit.

Even though a Short Sale is not nearly as bad for your credit as a Foreclosure, it will nevertheless stay on your file for years and will affect:

• • The Interest Rate on your next house
  • The Finance Price or Lease Payment on your next car
  • Your ability to Rent an Apartment
  • Your ability to get a credit card
  • Your ability to get a Business Loan

This is why it is important to figure out whether you really, really, really need one… NEED ONE.

You don’t necessarily need one in this scenario:

• You are not behind on your payment
• You owe $300,000 on your house that is now worth $200,000
• You like your home and have no immediate needs to move or relocate
• You can comfortably handle your monthly debts

You are right. It stinks that you are so far upside down in your equity. Yes… and it will take a long time to right the ship. But if you are not moving soon… or you are in a great house and love it there and it fits your current and long term future lifestyle - then why worry about a Short Sale??

A scenario where you may need to Short Sale:

• You are not behind on your payment
• You owe $250,000 on your house that is now worth $200,000
• You NEED to move because you just:
  • • had a new baby,
    • got relocated by work,
    • got a dog and need a yard
    • and so on

There are a lot of things to consider here… like if you try to rent your place out, can you get enough to cover the mortgage?

You also have to factor that in when you are qualifying for a new mortgage…it will count against your income in your debt to income ratios.

One consideration is simply how long do you believe you can actually stick it out despite the cramped quarters?

So what do you do?

First, start by contacting your friendly neighborhood Mortgage Broker (that’s me!!) and Realtor. Set up a coffee appointment and we three can go over your situation and lay out your options.

I can supply the financial advice and the Realtor can come with comps and market rental data and provide the real estate advice. The Realtor can also help you figure out how long it will take to sell your property in this market!

From there, we can provide referrals to Short Sale Attorneys (just in case), CPAs and Financial Planners (to help you set up a budget and maybe learn to pay down the excess in your mortgage).

Just because you are upside down does not mean you HAVE to do a Short Sale…

For more Short Sale information follow check out these posts:

• Short Sales do not always mean that the Realtor does not get paid!
• Short Sales ~ Where does the rest of the Mortgage Go?
• Short Sales and Bank Owned Properties
• All Short Sale Articles on TheMortgageGoToGuy.com

More Florida Real Estate Industry News You Can Use from
David A. Podgursky, MBA
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