I met with potential short sale sellers this week. The couple purchased their home with a VA, no money down mortgage several years ago and then refinanced the mortgage in 2009 adding thousands of dollars to the existing note. While they were able to lower their interest rate, it would take years to recover the cost of the refinance.

Now the couple finds themselves in the middle of a divorce and need to sell the home. While the market has held steady for the past couple of years, there has been little appreciation in the value of their home. The subdivision is still being developed so they also have to compete with new home construction.

Combine the divorce, little appreciation, new construction, and a refinance adding tens of thousands of dollars to the mortgage and you have distressed homeowners.

We discussed several options including selling the home bringing about $30k to closing, a short sale, a deed-in-lieu, and foreclosure. They don’t have the money to bring to closing and they don’t want to damage their credit. At this point they’re 30 days behind on the mortgage so the damage has already begun. “What’s the easiest path?” they asked.  I answered, “Do nothing and the home will go into foreclosure in another 60 to 90 days.” 

After some thought, they agreed to go forward with the short sale of the home. While this is not the easiest solution for the homeowners or their agent, it likely does less damage to their credit and their long-term financial picture.

The good news is these homeowners reached out to me early enough where I can help them with a short sale and keep this home out of foreclosure. If you’re having problems paying your mortgage, reach out to your lender or real estate professional. Help is available! You don’t have to use the easy solution and let the home go into foreclosure.