Loan Mod, Short Sale, or just WALK AWAY

Staying on top of a blog is hard work, with the market changing so rapidly we got so busy there for awhile i completely forgot about the blog.  At this point and for the last 10 months our primary focus has been short sales.  After a year of trying to get loan modifications done, we started leaning towards short sales more due to the fact that most modifications we did ended up just being band aids to a problem that needed more help(surgery maybe).  Let me explain:

In Arizona right now homeowners are generally about 30-50% upside down on their mortgages so if they were to do a loan modification they would have to get a 0% interest rate for their payment to be close to what it would be if they were to rent or buy a house today at 4.5%.  And then on top of that they are HANDCUFFED to their houses, they can’t sell without a short sale.  The lenders required them to go late before they approved the mod so their credit has been damaged worse than if they had done the short sale to start with.  Later down the road when they decide that they need to short sell the property they have a double hit of the lates(from the Mod), the Actual loan mod, and now the short sale.

My opinion tends to be that the sooner you get the damage done and over with, the sooner you are on the road to fixing your credit and buying a home again…not that you need to hurry, have you seen the stats for the market in July and August? 27% decline is sales July, and an Additional 5% decline in August.  Anyways i feel that if you do a short sale today in 2-3 years you can purchase again…and even if the market has picked up at that point you will still be in a much better situation than if you had stayed in your previous home.

Long Story short, I really feel that short sales work best for most homeowners but i just helped a really good friend get a loan mod this week and i finished a few more last month so the Loan Modification still has its place…it is just a very low percentage of people that I think it makes sense for.

I have  a tool on my website called a Break Even Calculator that arms you with the information to know how to move forward towards a loan mod, or short sale. Check it out at www.savingarizonahomes.com