The term "short sale" has been used quite often in the past two or three years since the slump in the housing market, but for someone who is on the market for a home the very first time, the term can be quite unfamiliar. A shortsale is a type of real estate transaction that permits a purchaser to buy a home at a much lesser price than its actual value. From the homeowner's perspective, a short sale is the most sensible way to get out of dismal mortgage debt or imminent home foreclosure. In simple terms, a short sale is a special real estate transaction where a property is sold for a price lower than what an owner owes on the home. Consider the example of a borrower who got an 80% loan to purchase a $300,000 home back in 2007. So he owes about $240,000 on that home. But because to the housing slump, home values have significantly crashed over the last three years. Some homes even lost as much as 30 to 45 percent of their original worth, hence that $300,000 home purchased in 2007 is in all probability just worth a little over $200,000 at present. The lenders know they can't take back the entire $240,000 owed on the home, so they will try to arrive at the best deal to recover as much as they can. They don't want to be left with a property that isn't delivering any income. Very new home buyers are advised to work with a real estate agent or short sale specialist so they can come across superb deals on homes and leave much to savings. You can actually buy this $300,000 home for two-thirds of it's original price. Naturally, if you let your thoughts limit you, you would reckon that it's just a $10,000 difference from it's present market value. But think beyond, say 5 to 10 years from now and imagine how much this home will be worth. Home values are no longer slipping - on the contrary, they are starting to pull through. A short sale could actually be one of the most lucrative purchases you'll make in a lifetime! It's a bit more complex to get into a short sale transaction, but just like all other mortgage arrangements, you will benefit from getting pre-qualified and approved for a home purchase. If you are ready with the money for the purchase, you may buy the home outright, but most experts will tell you to reap the benefits of the current buyer's market to build your credit rating. That means there are more individuals putting up homes for sale rather than buying homes. So if you're a home buyer, the present market situation is to your advantage. Interest rates on home loans are a lot lower, and no adjustable rate mortgage brokers are around to entice you into sub-prime lending arrangements. You will also have to obtain approval from the seller's creditor and from your own. The negotiation process can get a bit troublesome for the first-time buyer, so it is best that you work with a short sale specialist since they have vast experience in these types of transactions and can get you the best deals you won't be able to arrive at if you relied on your own efforts. | ||||||||
| For more tips on getting the best value for your first home purchase and to learn more about the short sale process, check out Short Sale Basics. We can also help you find great deals at our Best Home Deals Site |
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