After foreclosure or short sale, you will want to repair your credit.

After financial problems, your credit report reflects late payments, missed payments, and repossessions, as well as foreclosure, short sales, and bankruptcies. Also, it reflects the amount of debt you owe. Reviewing your credit report is the first place to start.

Analyze the past. Your credit report will give you insight as to how potential lenders might regard your financial stability, but you should go deeper. What caused your financial troubles? Will the foreclosure relieve your problems or do you need to go further, perhaps even declaring bankruptcy?

Budget. Regardless of the past, now is the time to develop a budget based on your current income. If you can’t meet your budget without using credit cards, you need to do more trimming. Ideally, you will be able to live frugally enough to pay off debt, so your debt to income ratio is lower.

Start paying your bills on time. It takes a while to overcome a late payment or a pattern of them on your report, but if you start paying on time, you will reestablish yourself. If you later want to buy a home again, lenders will be looking to see your payment patterns after your foreclosure or short sale.

Get help if you need it. You should stay away from most credit repair companies, but a credit counselor can help you at low or no cost. The housing counselor who worked with you during your foreclosure might be able to help you or refer you.

Secured credit cards. Owning a credit card for emergencies is a good idea, but you may not be able to get one unless you opt for a secured card. You will prepay a certain of money that becomes your credit line. The terms vary between banks, so it pays to shop around.

Give it time. Many delinquencies, foreclosures, short sales, and bankruptcies remain on your record for 10 years. If you start paying on time, you may be able to qualify for a mortgage or additional credit sooner, but the report tells the long term story. If heading toward financial trouble, many times selling your house to a third party company that buys houses will stop the money drain and allow you to reestablish yourself before you go into foreclosure or your problems deepen.

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If you are you are having financial problems that lead to foreclosure or short sale, your credit report will tell the story long after you have moved on. What is the impact? Is there a difference in the impact of foreclosure vs. a short sale when you sell your home?

Recently, FICO, the company that produces the credit score used by many lenders to evaluate creditworthiness, offered some surprising answers to these questions – and added some new insights as well.

Bad news for high scorers

First, FICO sees little difference between a foreclosure and short sale. In either case, the lender received less than the balance of the loan, so the defaulting homeowner might lose from 85 to 160 points from his credit score. Why the range? The steepness of the fall depends on what the score was to start out. High scores lost more points than ones that started out low. A high 780 score would lose the 160 points, while a mid-range score of 720 would lose 130-150 points, and the low score of 680 would lose “only” 85-105 points.

The same pattern of dinging high credit scores more heavily than low ones prevails with late payments too. When 30 days late, a high score might lose 90-110 points, plus an extra 20 if they were 90 days late. Low scorers are zapped 60-80 points whether they were late by 30 days or 90.

Here’s the kicker. A borrower with a high score will not recover from a late payment for three years in comparison to only nine months for a someone with a lower credit score.

This information seems at odds with the advice of most housing counselors to pursue a short sale rather than letting the house go into foreclosure. FICO says that someone who underwent a short sale would be better off only if the lender did not report the shortfall – a difference of only 35 points.

So, why pursue a short sale instead of a foreclosure?

When you go to sell a home, a short sale offers more control over the process. They may feel depressed that they have to give up the house, but they have more of a sense of closure on a bad situation. They can plan their future more easily than with a foreclosure.

When they go to buy another home, they should be able to do so in 24 months at a good interest rate. This assumes that they have kept their payments current after the short sale.

Though most analysts claim that either default impacts the report the same, there is a difference by state as to the impact. Borrowers from some states have reported hits up to 300 points from foreclosures and 100 points from short sales.

With a short sale, the homeowner remains with the property until closing, just as in a normal sale. As a result, the home is not left vacant for long periods of time, which keeps the property values intact and reduces neighborhood vacancy rates. The lender does have to maintain the property or see the value further lessened by vandalism and theft.

Banks benefit too

The lender accepts less than loan value with a short sale, but is spared the extra legal costs of pursuing a foreclosure in court. According the Joint Economic Committee of Congress, the average foreclosure costs $77,935 while preventing a foreclosure runs $3,300; the figures for the cost of a short sale are not given, but the major costs include processing and loss on the loan, without the court costs and property maintenance.

Though both short sale and foreclosures have roughly the same impact on credit scores, a short sale has many advantages both to the seller and the lender when selling a home. Since short sales are a remedy that costs lenders less than foreclosure, some lenders may look more kindly on short sales. As short sale is considered by some to be the best way to help our country get past the housing crisis; a time may come when this philosophy might be reflected in the scores themselves.

Have you experienced a short sale or foreclosure? If so, what advice can you offer based upon your experience?
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Are you ready to sell your home fast? Call us today at 1-888-835-4758 or contact us to sell a home in hours from Express Homebuyers.

The former first-time home buyer credit is now simply the “home buyer credit.”  It is up to $8,000 for first-time buyers and up to $6,500 for certain repeat buyers.  In either case, the deadline is April 30, 2010 for signing a contact and June 30, 2010 to close. The extra seven months give new life to short sales.  As long as a buyer has a contract in place by April 30, even if the closing does not occur till 11:59 pm, on June 30, the short sale buyer can claim the credit.

There is no guarantee as to how long a short sale will take to close, but if your buyer starts the process, you should have no problem.  The probability of success will decrease the closer time gets to the April 30^th deadline.

As it happens, there are may soon be incentives that will make short sales faster.  First, the government is now trying to promote short sales through the Making Home Affordable program.  That news is several months old, but the Treasury has been promising to release new incentives for lenders and sellers.  That should happen soon.

Second, lenders, starting with Bank of America, are beginning to implement a revamped short sale portal designed to centralize and streamline short sale processing.  Many of the 17 lenders that use the Equator (formerly REOTrans.com) program are expected to get on board.

If banks have any sense, they will embrace short sales and try to resolve as many as possible in the wake of continuing foreclosures.  That is not a done deal, however, as lenders and servicers are overwhelmed. Trying to selling your home at short sale could still be a prolonged process that results in refusals by the bank to accept your deal.  As the weeks and months drag on, you can find yourself under mounting mortgage pressure.

The Home Owner Credit offers you a chance to get a buyer; the extended time increases the likelihood the paperwork will go through, but there is still no certainty.

Can’t Wait It Out?

Express Homebuyers offers an alternative.  We will buy your home and guarantee completion of the process within a couple weeks.  We tell you up front what we will pay; if you agree, you are on the way to a quick resolution.  We even offer you a $2,500 upfront advance you can plan your fresh start.  Call us at 1-877-804-5252 or check out our Express Homebuyers website for more details.

1. Modifying the length of the loan or the interest rate
2. Waiving penalties and fees
3. Deferring payments to the end of the loan and making it longer
4. Applying past due amounts to the loan balance and slightly increasing each monthly payment
5. Holding a fixed rate on a loan ready to adjust
6. lengthening an introductory payment or interest rate or
7. granting temporary forbearance to stop the payments.

Presenting Your Request to the Lender

Not being social service agencies, banks do not widely advertise this “softer” side. To bring it out and allow a workout, you need to make a good case for yourself: make the lender confident that this will stop further loss. Just as is true with all credit issues, contact your lender at the first sign of trouble.  Your steps might include:

• Explain why you are in trouble and why you think the problem is temporary. If your interest rate changed and increased your payment, you need to show evidence you paid on time before change.  If your problems were caused by job loss, illness, or family circumstances, you need to show that it is likely you will have a job soon or that the crisis has passed.
• Show the bank that you have been trying to work things out on your own, through job hunting, part time jobs, or by reducing your living expenses.
• Present a specific proposal to the bank, with alternatives, verbally and in writing. A non-profit housing counselor, a real estate attorney, CPA, or other qualified source may be able to offer you some suggestions about what to propose. A typical request might suggest lengthening the loan, making it fixed, not adjustable, and lowering the interest rate.  If your proposal will lower your payment by $500 per month, you need to show how this will help you catch up and be on time in the future. A good faith payment might sweeten the pot if you are way behind.

Good preparation will increase the chance that the lender will accept your proposal.  Make sure to discuss with the lender representative how the new agreement will affect your credit record.  Your goal is to have your new payments reported to the credit bureau as “Pays as agreed,” but make sure you understand the credit ramifications before you finalize the terms.

If you decide you would prefer to sell your home, check out  Express Homebuyers.  We promise to buy your house fast or we’ll guarantee to help you sell your house fast and help you make a fresh start.

Whether or not you’re planning to sell your house any time soon, it never hurts to get things in order.  Even the tidiest homeowners are amazed by how quickly houses can become inundated by the clutter and items they accumulate.
Here are some easy tips toward consistently maintaining order and balance in your home, and ensuring that come sale time you don’t find yourself waging the war against disorder for the first time.

You Need Discipline and a Game Plan

• Instead of dabbling and making gradual improvements here and there throughout the home, focus your efforts on one room at a time.  Don’t move onto another room until the task at hand has been thoroughly completed.
• Force yourself to stay disciplined, and adopt the “in and out” approach.  For every new item you add to a room, remove an older one.
• If you have kids, make the cleaning process fun for them (yes, it is possible).  Whether it’s by giving them incentives to keep their rooms tidy and their personal belongings out of public spaces, or showing them how rewarding the result can be give them a tangible reason(reward, privilege, bribe)  to observe these rules even when they haven’t been reminded to.
• Have a vision of what the room SHOULD look like before you tackle it.
• Use hangers to sort the clothes you wear the most from the ones you break out only on special occasions.  Needless to say, garments that are out of season should be kept separately (a sealed, moth-proof rack for your hangers can be a crucial investment for your basement/attic space).
• When considering whether or not to retire an item, force yourself to decide whether you really, REALLY need it.  If you have a hard time deciding, you know what to do.
• Treat your kitchen as a sacred area: the real estate that includes your stove, sink, refrigerator and countertops should be occupied by useful items only.

When it comes time to sell your house fast, you will be more than rewarded for the work you have done on the front end. Of course, if you do decide to sell your house in the Maryland, Washington DC or Virginia area, give us a call. We can help.

What’s a Short Sale?

Let’s assume you understand the basics of the concept, and are familiar with the broad strokes: basically, a short sale is what occurs when a lender agrees to accept less than the amount owed against a home because there is no longer enough equity to sell and pay all costs of sale.  Put simply, if your payments are in arrears and it’s looking more and more like the lender won’t be able to recoup the full cost of the home, a short sale may be their best way of their getting something rather than nothing.

It Isn’t Perfect, But…

There’s no question that a short sale is far from an ideal outcome for anyone who owns a home.  If you find yourself in dire straits with either foreclosure or a short sale looming as your only two options, which do you choose?  Consider which does more damage to your credit?  Opinions on this topic vary, but the bottom line is, they both do a lot of harm.  Foreclosure typically knocks between 200 and 300 points off your score, while short sales have been known to trim your credit rating by anywhere from 100 to 300 points.  Bottom line: your credit will suffer either way, although you have a slightly better chance of losing less money and credit rating if you work with a real estate agent and negotiate a short sale.

It’s a Way to Protect Your Credit Rating.

We understand how hard it is for anyone to be facing these possibilities; if you’d like to know more about this process or have any other real estate questions answered, please don’t hesitate to reach out to us. Express Realty Services has a fully-staffed short sale department; we can help you work through every facet of your short-sale negotiation.