Do I Need to Continue Paying Mortgage During a Naperville Short Sale?

Do I Need to Continue Paying Mortgage During a Naperville Short Sale?

When you consciously or knowingly stop making mortgage payments, this is called a strategic default. Many people believe that a strategic default can accelerate their Naperville short sale, but this is not always true.

Whether or not you continue to make mortgage payments and HOA dues is a personal decision that can only be made by the borrower — not the lender or real estate agent.

To help you make an informed decision, you need to understand both the advantages of continuing your mortgage payments as well as the consequences of late mortgage payments.

Late mortgage payments can negatively impact your credit score and, as a result, can also impact your ability to obtain a loan in the future.

Contrary to popular belief, you don’t have to default on your mortgage payments in order to qualify for a Naperville short sale. The Home Affordable Foreclosure Alternatives (HAFA) program has released new guidelines that allow borrowers who are current on their mortgage payments to do a short sale.

As for HOA dues, unpaid HOA fees can kill your short sale deal. Short sale lenders refuse to pay the seller’s unpaid HOA balance. They will usually contribute a small amount for HOA document and transfer fees, but that’s it. It’s better to continue paying your HOA dues even during a short sale.

There are many advantages if you continue to make your mortgage payments:

1. Protect your credit score.

Being current on your mortgage payments protects your credit score because late payments will not be reflected on your credit report. However, your credit score may still drop by a few points due to a short sale and the lender may still report your Naperville short sale as “settled less than full.”

2. Shorter waiting period for buying another home.

Depending on the type of loan, the waiting period to get a new home loan and buy another home is 2-3 years after the short sale was completed. Fannie Mae and FHA allows short sale sellers to obtain a new loan immediately after a short sale on the condition that the borrower was never late on mortgage payments, which is another advantage of being current on mortgage payments.

3. Cancel without penalty.

In the event that you fail to sell your home as a Naperville short sale or if the lender does not approve the buyer’s offer, you can cancel the listing without liability and keep your home.

4. Peace of mind.

Being current on your mortgage payments will help you sleep better at night and avoid the stigma of being delinquent. Having one less thing to stress about makes it easier to deal with the complicated short sale process.

There are more advantages of being current on mortgage payments during a short sale. Although, there are instances when the homeowner could no longer continue making payments due to financial hardships or extenuating circumstances that are beyond their control.

If you plan on doing a Naperville short sale, make sure to work with an experienced Naperville short sale agent who has your best interests at heart and can help you arrive at an informed decision.

If you are ready to do a Naperville short sale call me, Teresa Ryan at 630-276-7575.  As a certified distressed property expert and Broker/Owner  of Ryan Hill Realty, I have the experience and tools to help you sell your Naperville short sale home.  Visit www.RyanHillCanHelp.com for more information on short sales and foreclosures.

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Teresa Ryan

Broker/Owner, CDPE

Ryan Hill Realty

1288 Rickert Dr Suite 300, Naperville, IL 60540

630-276-7575

TRyan@RyanHillRealty.com