One thing to keep in mind throughout the whole short sale process is that all of the parties on the "other" side (banks, investors, mortgage insurance companies, etc) are trying to minimize their loss. In order to do so, they are going to try to get as much money as possible from you as the borrower. One of the ways to do this is to ask for you to sign a "promissory note".
A promissory note is basically an unsecured debt. For example, if you owe $200,000 on your home and the net proceeds from a short sale are $150,000, the bank is losing $50,000. When you are negotiating a short sale, they will POSSIBLY counter and ask you for a $15,000 promissory note. This would basically mean that you would still owe them $15,000 and are promising to pay it over time. Generally the terms are 10 years and you do not pay interest. So, in this example, you would pay $125/mth towards that note.
It has been our experience that 9 times out of 10, the bank is will to take a smaller amount they offered and sometime we can have them remove it all together. It is important to remember thought that even if you do have a promissory note, it may be better to have a $15,000 as opposed to owing the total difference of $50,000 or worse, have a judgement for even more from a foreclosure!
For any questions about your best options or to learn more about the process of short selling your home feel free to contact us or visit our website at any time. Have a great day!
No comments:
Post a Comment