Foreclosure, short sale, loan modification, why are all of these terms becoming so common, and what do they mean to an individual home owner?

Values of homes are down forty percent or more in some places from their values at the peak of the market and unemployment in California is easily in the double digits. Across the nation, over 30 percent of home owners owe more than their homes are worth. Better than one out of every eight home loans are delinquent in some respect, and there doesn’t seem to be an end in sight.

If you are in danger of defaulting on your loan, you basically have three options: a loan modification, a foreclosure or a short sale. The pressure these days is toward short sales, because they offer an upside for real estate agents, lenders and buyers. But that then begs the question, is a short sale best for you or for them?

Generally, the answer is going to be no, even though those working with you in the process may want you to think it is.

Let?s look at this in more detail. So you are struggling to make mortgage payments. If you should stop making payments, what will happen?

Right off the bat, it will damage your credit. Your credit is needed to show to future lenders who might decide at some later point just how good a risk you are, and may make you seek out private money in the future. Additionally, it’s also being used by employers and landlords, to name a few. Deciding to move forward with an action that can ruin this score is something you really need to consider carefully.

Your FICO, or credit score is calculated with secret and company owned methods using information collected throughout your life as a borrower. According to the credit bureaus, these scoring systems are meant to give an indicator of how likely you, as a borrower, are to default on a loan during the first two years it is out.

Other companies have their own formulas that do pretty much the same thing. On another popular credit score scale, which runs from 500 to 990, stopping payments on all your loans will drop you into the low 600s.

If your credit is in under 680 based on one of the major credit reporting agencies in today’s lending environment, obtaining a loan for any reason can be terribly difficult (except, of course, if you are talking about private hard money loans). If you are concerned about loans for the future, a short sale of your house will not save your credit, contrary to what many in various industries might tell you. So is there really a beneift to going through a short sale?

The largest benefit is getting rid of the large debt of your home and the drag it has on your finances, and avoiding a foreclosure on your credit. A short sale usually will impact your credit about the same as a foreclosure, but with a short sale, you will be eligible for another conventional home loan after about two years, as opposed to 3 or more with a foreclosure.

A better option is to look at loan modifications. this can often be a long process to work through, but if you would like to stay in your house and save your credit, a loan modification may be a better solution to look at.

You must to do your own due dilligence before deciding on what course of action you are going to pursue. Also remember that different states have different laws and there will be different ramifications for the various options. Locate an honest real estate professional and/or real estate attorney, make an appointment, and go through all your options before you make a decision. This is a large financial decision, it is important to get it right!

Not too long ago, it seemed as if everyone was talking about house flipping. There were shows on TV, ads in the newspaper, and sitcoms showing a flip happen successfully in less than 30 minutes. Even during the best of times house flipping is a challenge. No matter how easy it looked on television, it was truthfully a great deal of work. You need to know more than just the average home seller. Contacts are extremely important, and understanding a little of each flipping component helps. Now, with a soft market and loan approval difficulties, flippers are having a lot of problems. If you think flipping Clearwater Real Estate or St. Petersburg Real Estate, take the following things into consideration.:

Maybe you believe you have found a house with a price tag and location too good to be true. You want to invest and you believe this may be it. The home may need some work, but you figure some paint and carpet could make you a tidy profit when it sells. While this may be the case, you need to proceed slowly. First, determine whether you have the funds to handle the mortgage payments for a few months. Should you find it difficult to sell the home, you need to pay for it in the meantime. If you already own a home, this might mean two mortgages. If you plan to live in the flip, it will not be quite as difficult. However, it is important to account for this being a possibility regardless of where you live.

Also, expect the unexpected. Even with the best house, there is no telling what contractors may find. Once work begins, there could be termites, dry-rotted wood, flood damage, or asbestos. None of these is impossible to fix, but it can set your budet off-track. Have a back up plan just in case. You may also find once the house is on the market that there are certain

houses which may be tough to sell without features that make or break a sale. If you plan a basic makeover, you may soon learn homebuyers want new floors and multiple bathrooms. These additional costs can set you back, but if it means you sell the house for ten thousand more than the original price you listed it for, you would be smart to do it.

In conclusion, if you are considering house flipping as a way to make money, move slowly. Be sure you have a firm grasp of the market, become familiar with reputable contractors, understand the selling process, and know your neighborhood.