A prophet once said: “A smart person learns from his mistakes, but a wise person learns from the mistakes of others.
As the publisher of the largest source of information for black homeowners, I receive questions from many homeowners from Maine to California. By looking into these questions, I think many other owners and future owners could learn from the questions and answers.
Whenever you have the opportunity to learn from the mistakes or questions of others… Do it! It’s the cheapest education you’ll ever get.
Therefore, I have decided to share the most frequently asked questions I received in the month of April 2008 from black homeowners across the country. As the housing crisis continues to increase its grip on more homeowners, it is important that all homeowners stay informed about this ever-changing housing climate.
As I have often said, the days of simply buying a home and living happily ever after without taking the time to stay informed, educated, and up-to-date are gone forever. As a homeowner in 2008, you either stay informed or the real estate market will educate you. The only risk in letting the housing market educate you is that it is unforgiving, merciless, and expensive. Self-education is the way to go.
These are the most frequently asked questions for April 2008.
1. What is a short sale?
A short sale is when a lender accepts less for a property than the amount owed. Short sales are more popular in a slow housing market. Be sure to consult with a qualified tax advisor about the tax implications of making a short sale.
2. Does a short sale hurt my credit?
It is estimated that a short sale will negatively affect your credit by 200 to 300 points. For example, if your FICO score was 700, a short sale will bring you down to a FICO score of 400 to 500.
3. How long will it take me to buy another house after a foreclosure?
Typically, it could take two to three years of a perfect payment history before most lenders feel confident enough to offer you a loan.
4. I want to sell my house but I don’t have the money to do much-needed repairs. Any suggestions?
In order to get the best price or even sell your property in this slow real estate market, it is essential to have your house in good condition. If your house is not in good shape… be prepared to offer a big discount and other benefits.
5. What is a reverse mortgage?
With a “reverse” mortgage, you receive money from a lender and do not have to pay it back as long as you live in your home. However, the loan requires payment when you die, sell your home, or no longer live there as your primary home.
Reverse mortgages help homeowners who have many homes (lots of equity) but are short on cash to stay in their homes and still cover their monthly expenses.
6. Who qualifies for a reverse mortgage?
To qualify for a reverse mortgage, you must be at least 62 years old and live in your home. The money from a reverse mortgage is tax free and most reverse mortgages do not have income limits.
7. Can I get a reverse mortgage if my house is in foreclosure?
You can get a reverse mortgage if you are in foreclosure. But your home must have equity and it must be your primary residence, not a rental, investment, or vacation property.
These are the top seven questions I’ve received this month from homeowners. As you can see, the questions reflect the dire condition of the housing market and what homeowners are increasingly concerned about is home affordability.
As a homeowner one of the keys to finding a solution if you think you are in trouble is to take action and seek help as soon as possible. With so many banks and advisory agencies overwhelmed now, you could be waiting in line for days or weeks before seeing or speaking with an advisor.
In the meantime, you will need to take responsibility for reaching out and seeking out people and organizations that can help you with information and guidance. I invite your questions and comments.