Aug 10
16
Short Sale vs Foreclosure vs Loan Modification In Santa Clara County
If you’ve been thinking about a short sale, a foreclosure, or a loan modification in Santa Clara County, there are some important decisions you need to make. Although you can learn a lot by reading articles and forums on the internet, at some point, you’ll want to speak to a real estate agent who has experience and a strong working knowledge of Sunnyvale, San Jose, Palo Alto and other towns in the Santa Clara market.
*short sale – selling your home for less than you owe
It is usually better for your credit and your ability to buy a home again is quicker when you do a short sale versus a foreclosure. Depending on your payment history, you could buy a home in as little as 2 years or sooner. In Santa Clara county, there are more buyers than sellers, which means you will more than likely end up with multiple offers. Some short sales are even getting approved by your bank in 7 days or less!
Here’s an example of a short sale in Sunnyvale. The home was bought for $1M two years ago. You haven’t paid down very much and still owe $975K. It’s now worth $750K. You’ve been making your payments as agreed, but the money is getting tighter because someone in the household got downsized or lost their job. You’d like to get out of the situation and would like to see if the bank would agree to a short sale. It’s times like these that it helps to have an agent (who knows the Sunnyvale market) deal with the bank and find a willing buyer in short order. This will help to minimize the damage it can do to your credit.
*foreclosure – the bank takes back ownership of your property for non-payment (not a good option if you have equity in your home)
In the case of a foreclosure, it’s going to be 5 years or more before you’ll be able to buy another home and it stays on your record for 10 years! A foreclosure means that you are not paying as agreed and that the bank will take back their property at some point. It could be six months, and I’ve seen cases where people have lived in their homes for up to two years! It all depends on the bank. If you’ve been in the home for 10 years or more, there’s a good chance that there’s equity built up (remember how values in the Bay Area skyrocketed during the housing boom?). It would be a shame to walk away from that equity, which is another reason to contact us to discuss your best option.
*loan modification, loan mod – asking the bank to modify the terms of your mortgage loan to a lower payment due to loss of income or emergency
If you’ve you been dealing with your bank in the hopes of modifying your loan then you realize that the process seems to move at a snail’s pace – but there’s good reason for that. A lot of people think that they’re eligible for a loan mod just because their home lost value. Although the percentage you may have lost is less than in other areas of California, in Santa Clara county, the values are much higher, so if you lose 10% of value in one year on a $1M loan, that’s $100K! In some areas in the US, that’s the cost of a new home!
Trust me, there is no guarantee that your home appreciates in value – and if it doesn’t, the bank has some obligation to modify the terms of your loan. Did your car appreciate in value? If your car’s value goes down, do you ask the bank to renegotiate the terms? Why would your home loan be any different?
What about the amount of time a loan modification takes? Is your process taking six months or longer? Does it really take that long to determine if they are going to grant you a loan mod? Don’t you think your bank would want to start receiving payments as soon as possible? If you think about it from the bank’s perspective, wouldn’t it make more sense for them to have a new buyer in the house, that has a vested interest in the form of a down payment, and a qualified means of making the payments? If they know you’re struggling due to less income, what is their incentive to work with you?
These are all points to consider when deciding which will be your best option in moving forward with your family’s financial future. For a free consultation with an agent who specializes in Santa Clara County and it’s surrounding areas, visit the site here.
All the best,
Joseph J Gomez
