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Short Sales Lake Tahoe
Now might be the perfect opportunity to own a home in South Lake Tahoe. Star will keep you updated with the hottest South Lake Tahoe Short Sale listings in the area including Price Reductions.
WHAT IS A SHORT SALE?
Background: Foreclosures and delinquency rates for mortgages are occurring in record numbers in the South Lake Tahoe real estate market. In general, reasons include high unemployment rates, loss of income due to decline in consumer spending, slower housing starts, and mortgage rate increases after conclusion of teaser-rate periods. Also contributing to the difficulties in making mortgage payments is the softening rental market. Investors who have rental homes from North Lake Tahoe to South Lake Tahoe, or resort rental properties (Marriott Grand Residence), have a harder time getting sufficient rents now to cover their mortgage payments or even getting tenants because of a large number of rental properties on the market. Higher insurance costs are adding to the difficulty for borrowers to keep up with their mortgage payments. Now that property values have significantly decreased around Lake Tahoe, these owners are in a predicament. Many have negative equity, i.e. owe the lender more on the mortgage than the property is worth. When this is the case, and the borrower needs to sell, one solution is a "Short Sale".
Definition: A “Short Sale” is when the lender agrees to accept a payoff for less than the remaining mortgage balance, and possibly forgive the entire shortfall, as well as pay the seller’s closing costs including the Realtor fee. The loss is either completely written off by the lender, a payment arrangement is made with the borrower (promissory note), or a lump-sum for a potentially lesser amount is agreed to (cash contribution).
Why Would A Lender Accept a Short Sale? Banks don't want to own real estate. A foreclosure can cost a lender $30,000 to $60,000. They have to maintain the property, market the property, pay for utilities, and spend money on closing costs. They would rather do a Short Sale- where the groundwork has been done for them and generally costs them less than a foreclosure.
SHORT SALE BENEFITS
A “Short Sale” is a much better alternative to Foreclosure or a Deed-in-Lieu of Foreclosure, and will do less harm to your credit. A Foreclosure will drop credit ratings by 200-300 points and remain on credit reports for seven to ten years. It usually takes 5 years before new mortgages maybe obtained, with 7 year lending restrictions. A Short Sale, however, may drop credit by 60-100 points, and 2 years is the common waiting period before new mortgage loans may be procured. Further, a "Foreclosure" on your credit will require you to answer certain questions on applications, such as for new loans or even employment with a "YES, I have had a foreclosure". Thus, if you have a house, condo, townhome or lot from Tahoe Keys, Meyers, Al Tahoe or Montgomery Estates and you are considering the alternatives, remember that a Short Sale may save your future ability to borrow.
STEPS TO A SHORT SALE
Note: Different lenders have different procedures for short sales, thus the required documentation may vary slightly from one lender to another. This information is not considered tax or legal advice.