By Jennifer Kotila
DASSEL, COKATO, MN Although the economy seems to be getting a bit better, there are still many people who are either out of work, working for less, or are just having trouble making ends meet.
In turn, some of those people may be having a difficult time making their mortgage payments, or have fallen behind on payments.
For those out there who are struggling, local Realtors can help make a difficult situation a little easier.
“We are here to make complex realty problems simple and right,” said Trudy Kilpela of Bradley Real Estate in Cokato.
When a homeowner is beginning to struggle with payments, a Realtor can help them explore their options and decide what is best for them.
Some of the options may include refinancing or trying to sell the house.
For homeowners already behind in their mortgage payments, a Realtor may be able to help facilitate a short sale with the mortgage company before the home is foreclosed.
A short sale can occur when a homeowner owes more on their mortgage than the home is worth, explained Mike Granquist, the broker for Bradley Real Estate.
For instance, if a homeowner owed $150,000 on their mortgage, but the home is now only valued at $130,000, the homeowner would explain the situation to the mortgage lender.
For a short sale, the mortgage lender would review the situation, and allow the homeowner to sell the home for $130,000, and forgive the $20,000 still owed.
Although a short sale will create a dent in a homeowner’s credit, it can keep a homeowner from the “black mark” of a foreclosure, and give them the ability to purchase a home again sooner, said Karla Lundin of Focus Realty in Dassel.
With a short sale, there may still be the possibility that the bank will still require the homeowner to satisfy the deficiency between what is owed and the short sale, especially if there is a second mortgage involved, said Kelly Babekuhl of Edina Realty in Dassel.
Really, a short sale is for the bank’s benefit when a homeowner is going through a hardship, said Wayne Murphy of Edina Realty.
In the long run, a short sale typically saves the bank more money than a foreclosure.
The advantage to the homeowner in a short sale is that their credit doesn’t suffer as much, and they are still involved in the process, said Stephanie Robertson of Bradley Real Estate.
In a foreclosure, the homeowner’s credit is destroyed, and they are no longer involved in the process, she said.
Babekuhl cautions people who are going through a short sale, to consider seeking legal and accounting services.
Lundin advises homeowners who are struggling to make mortgage payments to continue communicating with their mortgage companies.
“It is vital to keep a call log, and call as much as you can,” Lundin said. “I have found that a processing center’s turnover rate for the short sale department is very high, and by the time you are through the process, you may have talked to a minimum of six different people in the same position.”
“If somebody has a hardship and is going through the process, they should get a Realtor involved,” Murphy said. “The process of a short sale is very time-consuming. There are a lot of documents to fill out, and every bank has its own way it likes the documents processed.”