To Pay or Not To Pay That Is the Ultimate Short Sale Question
I want a short sale, should I continue to pay my mortgage? This question is a constant one for those considering a short sale. I find that ultimately, this is a very personal decision. Some people could not sleep at night knowing that they had not paid for the roof over their head or paid their bills. So, for some, it is a moral issue. Others feel no such obligation to go into further personal debt or deplete savings to continue to make their mortgage payment when they know the end result will be a short sale or foreclosure. For them, it is a contractual and/or business decision. I do not tell people to stop paying their mortgage. It is a personal decision in my book. However, it is clear that you don’t have to stop making payments in order to qualify for a short sale.
I find that many people with high incomes and/or substantial assets often make the strategic decision to stop making payments because they do not believe that the lender will consider their hardship case without it. So, they are not making payments to drive home the issue of hardship to the lender. Others are not making payments because emotionally and financially they are done. They would like a short sale but if a foreclosure is the only way, they are fine with that as well. They want the lender to know that too, so they stop making payments. I find that with or without making payments, short sale lenders are asking for contribution from high wage earners and those with substantial assets. So, you have to be prepared for that possibility either way. Not making payments should be a decision made with the proper legal and tax advice, and where you are emotionally and financially will probably weigh heavily in that decision as well.
Potential short sale sellers should be aware that if they are still able to make their mortgage payment but their hardship is on the horizon due to imminent circumstances (unemployment, lay off notice, or reduction in pay), they do not have to wait until they are no longer able to make payments in order to apply for a short sale. Short sales with no or few missed payments do happen. And, strictly speaking, a short sale with fewer missed payments is better for your credit than a short sale with a number of missed payments. The decision of whether you should tap your retirement fund or credit card line to continue making payments while applying for a short sale is completely a personal one that should be made with the advice of your own legal and tax professional.
If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home, you should seek out an experienced Central Coast Short Sale Agent to guide you through the process. If you would like a short sale consultation, please call my office to schedule a meeting or a private telephone consultation at (805) 938-9950.
Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
Copyright© 2011 Tni LeBlanc *To Pay or Not To Pay That Is the Ultimate Short Sale Question*