A short sale is far from hassle-free, but it's a better alternative than foreclosure. Here are the

facts about short sales and how to get started.

Short sales get government incentives
Although short sales are not hassle-free, at least you've got the government backing you. The Home Affordable Foreclosure Alternatives (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales or deeds in lieu of foreclosures.

Participation in the HAFA program requires adherence to guidelines--including a standard process and minimum timeframes--that speed the process, says Dallas-based REALTOR® Tom Branch, co-author of Avoiding Foreclosure: The Field Guide to Short Sales. The HAFA program is for homeowners who can't keep their homes with the help of a loan modification.

Advantages of a short sale
You can be a homeowner again more quickly with a short sale in your past than with a foreclosure. New Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to up to seven years after a foreclosure.

You will have more time to make relocation plans and save money than with a deed in lieu. A short sale may take four to 12 months. A deed in lieu of foreclosure arrangement typically requires you vacate your home within 30 to 60 days of signing.

You can receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.

You can help your community's home values. Because the lender often receives a higher amount of the remaining loan balance than it would from the sale of a home after a foreclosure, short sales help support home values in the surrounding community.

Disadvantages of a short sale
Your credit score will take a severe hit. But that would happen anyway with a foreclosure. Fair Isaac, creator of the FICO score, says foreclosure and short sales have virtually identical impacts on your credit score. VantageScore--a company that has created a credit score model for consumers--says a short sale will lead to only a marginally lighter hit when compared with foreclosure. 

You may owe additional taxes. In the past, if your outstanding mortgage was $100,000 and your lender accepted a short-sale purchase offer of $90,000, you were liable for income tax on the forgiven $10,000, says Harlan D. Platt, economist and professor of finance at Northeastern University in Boston. However, the Mortgage Forgiveness Debt Relief Act of 2007, which runs through 2012, generally allows taxpayers to exclude income from the discharge of debt on their principal residence in some circumstances. Full relief is available only if the amount of forgiven debt doesn't exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Consult a tax professional and an attorney to minimize or avoid this liability.

In some states, your lender may still be able to come after you for the difference between the short sale price and the amount needed to pay off the mortgage. Your actual agreement with your lender and state and local laws and regulations spell out the details. Consult a tax professional and an attorney to minimize or avoid this liability. 

How to proceed with a short sale
Find a qualified REALTOR® experienced in short sales. Short sales are tough to navigate, and they're further complicated by your loan type--FHA vs. Veterans Administration vs. conventional loans. Real estate agents who specialize in short sales will know the proper steps and order of the steps involved. They'll also be able to navigate the many parties involved in the process and over-burdened loss mitigation departments. Look especially for agents who have Short Sales and Foreclosure Resource (SFR) Certification, which requires specialized training.

Gather evidence to support your need for a short sale as opposed to a foreclosure. You'll need to prove that you have little or no equity in your home, you're behind on your payments, and you're no longer able to afford your home. You'll need to write a hardship letter to the lender describing your circumstances, such as a divorce, job loss, illness, death, or other event that has impacted your income.

A short sale can be a time-consuming process, but if you can avoid foreclosure, it's worth it in the long run.

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7 Tips for Short Sale Success
Have to sell your home for less than it’s worth? Our seven tips will help you get the best price.

1. Know who you owe
A short sale has to be approved by any company that has a mortgage or lien against your home. That includes your first, second, or even third mortgage lender, your home equity line lender; your homeowners or condominium association; and any contractors who’ve placed a lien on your home. Make a list and start talking to everyone early in the process. Ask what documents they’ll need from you.

2. Pick your short sale team
You’ll need to work with a team of short sale experts, including a real estate agent, real estate attorney, and your accountant. Look for agents and attorneys who advertise themselves as short sale experts. Interview at least three, and listen carefully for signs that they understand the complexities of the short sale process.

Agents should explain how they’ll arrive at a suggested price for your home. Ask them to show you a sample short-sale package or for an example of a prior short-sale success.

3. Get your documents ready
Gather the paperwork your creditors and mortgage lenders asked to see, like your listing agreement and a hardship letter explaining why you need to do a short sale. You’ll also need proof of what you earn and what you owe as well as copies of your federal income tax returns for the past two years.

4. Expect delays
Despite a federal rule saying banks participating in the federal government’s Making Home Affordable loan modification program must respond to short-sale offers within 10 days, it may take weeks or months for your lender to decide whether to allow you to sell your home in a short sale--and even longer if you must negotiate with more than one lender or lienholder.

Your lender and lienholders don’t have to agree to your proposed short sale. They can reject your terms or make a counteroffer, which can create further delays.

5. Anticipate demands
Discuss with your short-sale team how you should respond to common short-sale demands from lenders. For example, are you willing to sign a promissory note agreeing to pay outstanding amounts after the sale is complete?

6. Know the tax implications
Any unpaid amount of your mortgage “forgiven” by your lender through a short sale may be considered income to you under federal tax rules. Ask your attorney or accountant whether you qualify to exclude that amount as income on your tax returns under the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act. Also ask if you’ll be required to report amounts “forgiven” by other lienholders, if applicable.

7. Consider how the short sale will affect your credit and what you must pay
Ask whether your lender will report the short sale to credit-reporting agencies. Having a portion of your debt forgiven may negatively affect your credit score, but a short sale typically damages your score less than a foreclosure or bankruptcy.

Ask you lawyer whether you'll be responsible for paying back the lenders' loss. If the lender says it will forgive any losses on the sale of your home, get that promise in writing.

Once you find the perfect house for you, it’s time to make an offer. It’s important to understand what’s

 included in a purchase offer because if it’s accepted, it’s a binding, legal contract. So, know what you’re signing! And don’t be discouraged if the seller comes back with a counter offer. Negotiation is a normal part of the process.

A standard purchase offer will include: 

The full names of both the buyer and the seller.

The address of the property. A legal description of the property usually will be attached.

The price you’re offering to pay for the house. If you offer less than the listing price, this usually is a starting point for negotiation. The seller may come back to you with a different amount. That’s called a counter offer.

Response time. You will list a date and time by which the seller needs to respond to your offer.

Earnest money. This is basically a deposit; it shows that you’re serious about wanting to buy the house. It’s different from a down payment, which is paid at the closing. Earnest money is held in the real estate agent’s or attorney’s account until the deal closes. If the deal doesn’t close, you’ll get it back or forfeit it, depending on the reason it didn’t work out.

Information and time limit on financing. This will state how you plan to pay for the house. If you need financing, there’s a time limit for you to obtain a loan.

Right of inspection and request for repairs. This requires the seller to make the house available for an inspection and asks them to make necessary repairs, usually to a particular dollar amount or percentage of the sale price. Even if a house is being sold as-is, you can demand an inspection. If it turns up a problem you’re not willing to take on, you can back out without losing your earnest money.

The date for closing and possession of the property. This is the date by which the transaction needs to be completed, and the date that you can move into the house.
Closing costs. This section will cover each party’s obligations for paying costs associated with the sale, such as the fee for the home inspection, the appraisal and the lender’s fees.

Final walk-through before closing. This provision gives you one last chance to inspect the house for problems before you sign the papers to close the deal.

Contingencies. Contingencies are situations that would need to happen before you can buy the house, such as selling your house, the house passing inspection or obtaining an acceptable appraisal.

Items to stay with the property.  These are things you’d like the seller to leave in the house for you. It usually includes major appliances, but could also include certain pieces of furniture, window coverings or lawn equipment.

Oh, and one last thing. Don’t forget to sign the offer! Contracts aren’t valid until all parties have signed them.

Open more doors with an FHA Condominium Approval
Courtesy of Advance Mortgage Company. Help increase financing options for your property's prospective buyers and current owners.
We can help make your community even better with an FHA condominium project approval and specialized home financing – providing you an opportunity
to increase your development’s value by better serving your residents’ needs.

The importance of an FHA project approval
Did you know an FHA approval for condominium projects is now required?

Beginning in 2010 if your condominium development is not approved by FHA, your current homeowners and future homebuyers are not able to utilize the most
readily available mortgage program - FHA financing. This in turn may limit their ability to refinance or purchase a home within your community.

An FHA condominium project approval can help you keep homeowners happy
and sell a property’s potential to buyers.
• Larger buying pool – Including first-time homebuyers and low-to-moderate
income residents
• Convenient – Value-add for your homebuyers
• Accommodating – Higher homeowner satisfaction with HOA board and/or
management company
• Resale marketing perks – Fully assumable “built-in” financing for qualified
future buyers
Government-sponsored mortgage financing may provide your owners and buyers:
• Flexible credit and income-qualifying guidelines
• A variety of fixed- and adjustable-rate loan terms
• Down payments as low as 3.5%
• Maximized availability of mortgage products, including reverse mortgages
for senior homeowners*
• Access to Downpayment Assistance Programs (DAPs)

Contact Advance Mortgage to learn more and get started with your project approval process.

*Must be at least 62 years of age. Call for more detailed program information.
This information is for home owners associations, management companies, and real estate
professionals only and is not intended for distribution to consumers or other third parties.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. 2010 Wells Fargo Bank,

N.A. All rights reserved.

Most homeowners will only sell a house a few times in their lives. It's an incredibly important process;

 done correctly, it can be very successful financially. That's why the process of selling a house needs to start with choosing a real estate agent who knows your market and can help you properly market your house at the right price to the right buyers. Yet with so much at stake, many homeowners choose a real estate agent because the agent is a family member, a neighbor or someone they met in a coffee shop.

If you’re getting ready to put your house on the market, you should choose your real estate agent with the same care that you would use to select a doctor, an attorney or an accountant. It's important because a good real estate agent will serve as your representative in the real estate transaction. They will make recommendations on things to do to help sell your house for the highest possible price and the shortest amount of time. They’ll make sure that your home is marketed to the right group of prospective buyers, handle negotiations on any offers that are submitted and check on the ability of buyers to get financing. It’s a big job.

Here are some tips to help you select a real estate agent when you're selling a house:

Get recommendations from people who have sold houses in your area in the last year. The market for sellers is extremely competitive; you want an agent who has been successful selling houses like yours under the current conditions. Ask what their agent did to market their house, how long it took to sell, the listing price and the price at which the house eventually sold. (If these questions seem too personal to ask, the information may be available on real estate websites such as Trulia.com or Zillow.com.)

Attend open houses in your neighborhood. See how the listing agent represents the property to prospective buyers, both in the presentation and in the printed materials about the house.

Once you've done these things, make a short list of the agents with whom you were most impressed and call each of them to ask for presentations. You'll want to receive a comparative market analysis to determine a range for a sale price, suggestions on things you could do to your house to get the best possible price, information on how they would market your home, and the terms of their listing agreement.

You'll want to ask:
-Is real estate your full-time job?
-How long have you worked in real estate?
-Are you a member of the local Multiple Listing Service (MLS)? This is critical for reaching the widest range of prospective buyers.
-Are you a REALTOR®? Only members of the National Association of of REALTORS® can use this title; the term means the agent follows and is bound by the NAR's standards and code of ethics, which often far exceed state requirements for licensing.
-Do you hold any professional designations, such as the National Association of  REALTORS® Green Designation? These real estate professionals are specialists in marketing the value of energy-efficient, sustainable homes. 
-How many listings do you have -- and how many houses have you sold -- in our neighborhood and price range in the past 12 months? An agent with several dozen listings may sound very experienced, but the more important question is how many houses they've listed that have sold, how quickly they've sold in comparison to the overall marketing and at what price they've sold in comparison to the original listing price. This will give you a very good picture of how well they understand the market in your area.

Check the status of their license. Every state requires real estate agents to be licensed, and to keep their licenses in good standing. The licensing agencies have the authority to suspend or revoke an agent's license for misconduct. Check with your state's regulatory agency -- it's often a department of professional regulation -- to see if any complaints have been filed or disciplinary action has been taken. If the agent is a REALTOR®, you can check their standing with your local Board of REALTORS®.

If you’re buying a house for the first time, you’re coming across a lot of terms you might not have heard before.

One of those is title insurance.

This is one of those things you’re required to purchase if you’re going to have a mortgage. But even if you’re paying cash for your home, title insurance offers invaluable coverage. Here’s why. 

Even if you’re buying a brand-new house, you’re not the first owner of the house or the land that it sits on. The property could have changed ownership any number of times over the generations. Every time it was sold or passed down from one person to another, the title changed hands. Papers were signed, deeds were recorded, taxes were assessed and work was done. But paperwork can get lost, county warehouses full of old records burn down, signatures can be forged, taxes don’t always get paid, permits don’t always get pulled for work done on the property, and unpaid plumbers can file liens. Heirs can show up who have a claim to the property. Wills can be contested.

Title insurance protects the titleholder (either your mortgage company or you) against legal claims that come from these kinds of problems.

Unlike other kinds of insurance you buy, which covers you from the day your policy is purchased going forward, title insurance covers you for things that happened before you bought your coverage. Another difference from other kinds of insurance is that instead of paying a monthly or annual premium, you only pay the premium once, when you close on your house.

There are three kinds of title insurance coverage: a lender’s policy, a basic owner’s policy and an extended owner’s policy.

A lender’s policy is exactly what it sounds like. It covers your lender, up to the amount of the loan. If you have a mortgage, you’ll be required to provide your lender with title insurance. It protects them, not you.

A basic owner’s policy covers things such as forged or fraudulent signatures on a title, a deed executed through an expired or invalid power of attorney, mistakes in recording the title, or unpaid liens from inheritance, gift, estate or income taxes. 

An extended owner’s policy covers such as building permit and covenant violations from previous owners, incorrect surveys and living trusts.

Talk to your trusted real estate professional about the cost and benefits of title insurance. 

You’ve found the perfect dream home and interest rates are still very low. Everyone keeps saying it’s the best time to buy and you

want to jump on that train. There’s just one thing standing in the way of your new home: a down payment.

Saving for a down payment is hard work. Its difficult to turn down a weekend getaway or a night out with friends, but pinching pennies is the best way to start saving. If you have a definite goal in mind, making small sacrifices shouldn’t be much of a challenge. Here are some other ways that will help you come up with the extra money.

Determine how much you need. Find out the exact amount for your down payment and that will keep you motivated to track your progress. Try to save up 20% of the cost of your home and set a deadline. This will keep you focused.

Pay off your Plastic. When you carry a credit card balance, interest is constantly accruing and that means more of your money to the card companies. Free up more of your income by paying off the most money-sucking credit cards.

Start a separate Bank Account. This is always a good idea to stash money away in savings account whether you have $1 or $1,000 to put into it at first. This will also help you avoid tapping into it for other expenses.

Tap into your IRA. Tax laws will allow first-time homebuyers use up to $10,000 in funds towards a down payment. If you’ve never owned a home before, the government waives the penalty for early withdrawl.

Family Gifts. Many times Grandparents, parents, in-laws or even siblings may be willing to give you a gift of money to help you get that first home. Most lenders are okay with a gift from family as long as it doesn’t have to be repaid. A gift letter from that person will satisfy this.

Check into Special Programs. Because buyers struggling to come up with a down payment have varying range of incomes, many government and local agencies have aid available.

Ask for a Raise.  No luck finding a benefactor? It could be time to ask your boss for more money, but just make sure that it based on your accomplishments rather than your needs.

Sell Unwanted Items. There could be some forgotten items or things you wouldn’t mind giving up for money, or down payment. Go ahead, clean out your closet, attic or garage. Another man’s trash is another man’s treasure. Websites like Craigslist and eBay make it easy for you to auction off these things.

So, you‘re applying for a mortgage. Congratulations! This is an exciting time in your life. If you’ve never bought a house before, you’re probably coming across some terminology you’ve never heard before. Here are 10 common terms you’ll probably hear your REALTOR(R) or your lender mention, or that you’ll see in loan documents:

Amortization: the process of paying off a loan over a specified period of time by making regular payments that include both principal and interest. Most mortgages have an amortization of 30 years. 

APR (annual percentage rate): the interest rate for your loan, plus additional loan costs, such as points. It will be higher than your interest rate because of the additional costs.

Closing: the process of transferring ownership of real estate from the seller to the buyer. You’ll sign your name and your initials more times than you thought possible, give the closing agent the check for your down payment and closing costs, and get the keys to your new home!

Escrow: an account to hold and disburse funds collected from every mortgage payment to cover the cost of property taxes and homeowner’s insurance. 

Lock: an option during the loan process to secure, or “lock,” the interest rate and points that are available at that time. People generally want to lock in terms to avoid the risk that mortgage rates will go up before the closing date.

MI (mortgage insurance) or PMI (private mortgage insurance): insurance required by a lender when a borrower finances more than 80 percent of the value of the house. It protects the lender if you default on your loan and is added to the monthly payment. When you have 20 percent equity in your house, you can cancel this insurance.

Points: One point is equal to one percent of the loan amount. There are two kinds of points. Origination points may be added to cover the expenses associated with processing a loan; discount points are used to lower the loan’s interest rate. 

PITI: principal, interest, taxes and insurance, the four components of most mortgage payments.

Principal: the actual dollar amount that you’re borrowing from the lender to buy a house.

Underwriting: the part of the loan approval process when a lender reviews the information in your application and decides whether or not to approve the loan. Be prepared to provide lots of financial information and DNA samples (just kidding about the DNA). 

The best mortgage rates are offered to the borrowers with the strongest credit. Lenders look closely at a borrower’s credit score, so it’s to your advantage to do everything you can to make sure your score is the best it can be. 

The first step to take is to order your credit reports from all three major credit bureaus - Experian, Trans Union and Equifax. You can get a free copy of your credit report once a year at annualcreditreport.com or by calling 1-877-322-8228. (You’re also entitled to a free copy if you’ve been denied credit based on information in your report.) If you want them faster and with your credit score, you can also buy your reports online. 

When you get your report, make sure all the information is accurate. Look for accounts that aren’t yours or late payments that shouldn’t be there. If there are errors, take steps to correct them. The report will tell you how to dispute information in your file. Also, check for negative comments, such as accounts that have been turned over to collections, and public records, which include bankruptcies, foreclosures and evictions. If you have old, unpaid debts on your credit report, contact those creditors and make arrangements to get current and then stay current.

The best thing you can do to improve your credit score is to pay your bills on time every time. Payment history is the biggest factor in determining your credit score.

If you have credit cards, pay them off every month if at all possible. If that’s not possible, keep an eye on your balance. You don’t want to have a balance of more than 30 percent of the available credit. 

The length of your credit history also is important, so don’t take out a lot of new credit, or even apply for new credit, unless it’s necessary because it brings down the average age of your accounts. Don’t get sucked into applying for a store credit card to get a 10 percent discount on that day’s purchase.

In today’s housing market, many homes for sale are in need of repairs and renovations. The FHA Streamlined 203(k) program helps add money into a mortgage for repairs and renovations. Lowe’s and REbuildUSA are partnering to bring a national in-store

program offering customers a one-stop destination for all of their repairs, renovation products and services needs.

“Homes needing renovation are typically the very best buys available; however, most prospective buyers have no idea how to finance both the purchase of the home and the renovation work required,” says Dennis Walsh, CEO of REbuildUSA. “The FHA Streamlined 203(k) offers a competitive solution. At the same time, millions of current homeowners could also benefit from this program that offers excellent rates and the ability to make improvements to their homes. We’re excited to partner with Lowe’s to make use of the Streamlined 203(k) much easier than ever before.”

The FHA Streamlined 203(k) renovation loan program provides funds for both the purchase and renovation of eligible homes packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors. There were approximately 21,000 FHA 203(k) loans in 2009, including Streamlines.

“Lowe’s is working with REbuildUSA to be the home improvement solution for products and services required by a Streamlined 203(k) loan,” says Mark Malone, vice president of consumer marketing for Lowe’s. “We can help facilitate the needs of home buyers acquiring distressed properties and facilitate the process of getting their projects done.”

And for the industry’s top leaders, they believe this announcement is coming at just the right time. “[This program] is nothing less than the future of real estate,” explains Ed Krafchow, president and CEO, Prudential CA/NV Realty.

Specially trained Lowe’s associates in stores across the country, except in Texas, can help the customer plan the project and select products and Lowe’s independent subcontracted installers can handle the installation. The program allows Streamlined 203(k)-qualified customers to have a huge selection of products and services under one roof, and it gives customers the ability to immediately improve their homes by adding equity with the repairs and renovations.

Concludes Alex Perriello, president and CEO of Realogy Franchise Corp.: “REbuildUSA is a concept whose time has come and will have a positive impact on the real estate industry and homeownership in America.”

When preparing to purchase a home, credit scores and history are ever important. Learn what to look out for

before filling out a mortgage application.

What DOESN'T Affect Your Credit Score:

• Your bank account has no effect on your credit score (except when you bounce checks and they turn into collections).

• Payment of household bills does not affect your credit score (unless you don’t pay the bills and they turn into collections).

• Payment of insurance does not affect your credit score.

• Payment of your rent doesn’t affect your credit score (except when you violate your lease and that becomes a collection or judgment).

• Payment of medical bills does not affect your credit score (except when you don’t pay them and they turn into collections).

What DOES Affect Your Credit Score:

• Any loans and credit card accounts. Some banks (especially smaller) do not report to the credit bureaus and loans that don't report to them don’t help your credit score. Any late payments that are 30 days or more on your credit report have a highly negative effect on your credit score. If you get 60 or 90 days late, your credit score will take a very long time to recover.

• Balances you carry affect your credit score. Carrying high balances in relation to the card's credit limit will negatively affect your score. You should avoid carrying a balance over 30% of the credit limit. If you have balances over 30%, you should pay them down.

• New credit will greatly impact your score. If your overall credit history is pretty short, taking on a new car loan will lower your score. After you have made payments on the loan for 6 months, those on-time payments will start improving your credit score, but to begin with, your score will drop.

When it comes to getting a handle on your credit score, it can really help to know some things about what affects your credit score and what doesn't.