Tuesday, July 17, 2012

Albuquerque Mortgage Loans and Short Sales

Another huge topic in the discussion of Albuquerque mortgage loans is a short sale or a pre-foreclosure sale. This is actually one of the largest factors that can affect anyone's credit. Here are some of the nuances and fundamental details that anyone should know about pre-foreclosure sales.
Basic Definition of a Short Sale - In Plain English
Veering away from any type of technical jargon, a pre-foreclosure sale or short sale happens when a lender (such as a bank for instance) agrees to discount a borrower's loan balance due a financial or economic crisis or hardship on the part of the borrower.
The borrower then goes on to sell the mortgaged property according to the original loan amount minus the amount of the loan balance that was already waived by the lender. The effect of course is that it will make the mortgaged property a lot easier to sell, as opposed to selling the entire property at full price.
Once the property in question has been sold, the entire sale amount will then be surrendered to the lender. This will be then be taken as the full payment of the borrower's debt. That basically sounds like a pretty good offer in case both parties can agree on it. It will be an easy compromise. However, it will also have other facets that both parties will have to deal with.
One thing that should be remembered is that before any money gets to exchange hands between a would-be buyer and the borrower, the lender or bank should approve the proposed sale, which definitely includes the sale price. This is a way to protect the interest of the lender. The borrower can't be allowed to sell the property at rock bottom prices.
Take note that this is not an easy deal to pull off especially with a bank. There is just no guarantee that the bank will discount the amount of the balance that has not been paid by the borrower. Many factors will definitely come into play including the prevailing market climate.
Benefits to Both Parties
In the world of Albuquerque mortgage loans, this is positively seen as a win-win situation. Executing a short sale entirely prevents a foreclosure. The lender will benefit from the deal since it will only represent a small fraction of monetary loss. On the part of the borrower, this is an opportunity to keep one's credit record or credit history clean. No one wants to have a foreclosure tainting their credit history.
Effects on the Borrower's Credit Status
Make no doubt about it, a short sale will still get recorded into the records of anyone's credit history. However, the record will be marked as a paid settlement. Given the current crisis in today's property industry, short sales have become quite common.
A short sale is actually a really good option especially when one's finances are in the rough. Sure the borrower loses a home but at least the credit history is not completely marred and the lender gets to keep a good portion of the money that was lent. This can be seen as a good option especially when dealing with Albuquerque mortgage loans.

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