Short sale, long-term investment
If you’re thinking of buying property in America, experts recommend the best deals could still be “short sales”, especially if you’re looking in Florida. Similarly, the same solution might suit you if you’re struggling to meet repayments against your American home.
A short sale is an arrangement where the mortgage lender allows the borrower to sell his or her home at a price less than the outstanding debt; the bank is therefore agreeing to forgive the borrower the rest of the unpaid loan. Although this may sound drastic, the outcome is usually a win, win for both parties.
When a homeowner is in financial difficulty and starts to default on payments, mortgage lenders have little to gain by applying pressure on the owner because the chances are there is no more money to be had. If the bank repossesses the property, the owner faces bankruptcy and the bank faces a lengthy and costly process to get the property sold. With a short sale, the property is sold following the usual process and losses are minimised on both sides. According to a recent Bloomberg report in businessweek.com, Moody’s noted that losses for lenders were about 15 per cent lower for lenders with a short sale than with a foreclosure (repossession).
In the same report, Bloomberg noted that banks are even offering homeowners a cash lump sum to proceed with a short sale rather than suffer foreclosure; the cash deals amount to anywhere from $10,000 – $35,000. The federal government’s Home Affordable Foreclosure Alternatives program also offers up to $3,000 to homeowners who complete short sales in order to keep the property market moving.
For details of property for sale in America, visit the USA listings on Rightmove Overseas. One way to save money when buying in the USA is to use a currency specialist when transferring your pounds into dollars to complete the purchase of your property. For more information on this, contact Smart Currency Exchange.
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