A prophet once said: “A wise man learns from his mistakes, but a wise man learns from the mistakes of others.
As the editor of the largest source of information for black homeowners, I get questions from many homeowners from Maine to California. As I review these questions, I have a feeling that many other homeowners and future homeowners could learn from the questions and answers.
Whenever you have the opportunity to learn from others’ mistakes or questions… Do it! It’s the cheapest education you’ll ever get in your life.
So I decided to share the most frequently asked questions I received from black homeowners across the country in April 2008. As the housing crisis tightens its grip on more and more homeowners, it’s important for all homeowners to stay current with this ever-changing home environment.
As I’ve said many times before, the days of just buying a home and living happily without taking the time to stay informed, educated, and current are gone forever. As a 2008 homeowner, you either stay educated or the housing market will educate you. The only risk of letting the housing market educate you is that it’s relentless, unforgiving, and expensive. Self-education is the way to go.
Here are the most frequently asked questions for April 2008.
1. What is a short sale?
A short sale is when a lender accepts less than the amount owed for a property. Short selling is most popular in a slow real estate market. Be sure to consult a qualified tax advisor to determine any tax implications of a short sale.
2. Will short selling hurt my credit?
It is estimated that a short sale will negatively impact your credit score by 200 to 300 points. For example, if your FICO score was 700, short selling will reduce it to a FICO score of 400-500.
3. How long will it take before I buy another home after a foreclosure?
Typically, it can take two to three years with a perfect payment history before most lenders are confident enough to offer you a loan.
4. I want to sell my house, but I don’t have money for urgently needed repairs. Any suggestions?
In order to make a top dollar in this slow real estate market or even sell your property, keeping your home in good condition is a must. If your home isn’t in good shape… be prepared to offer a big discount and other perks.
5. What is a reverse mortgage?
With a “reverse” mortgage, you receive money from a lender and don’t have to pay it back as long as you live in your home. However, the loan must be repaid if you die, sell your home, or stop living there as your primary residence.
Reverse mortgages help homeowners who are home rich (lots of equity) but cash poor 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 have no income limits.
7. Can I get a reverse mortgage if my home 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 property, or vacation home.
These are the top seven questions I got from homeowners this month. As you can see the questions reflect the serious state of the housing market and what is affecting more and more homeowners and that is home affordability.
As a homeowner, if you think you’re in trouble, one of the keys is finding a solution, taking action, and seeking help sooner rather than later. With so many banks and advice centers now overwhelmed, you could wait in line for days or weeks before seeing or speaking to an advisor.
In the meantime, you must take it upon yourself to reach out and seek out the people and organizations that can help you with information and guidance. I welcome your questions and comments.