There has been lots of talk about the National foreclosure rate, which is up 81% from last year (6% from January and 30% from last February) and a staggering 225% from 2006. Tennessee's foreclosure rate is is currently 16.5 per 1000 homes making the state foreclosure rate 1.65% which is not nearly what you'd expect given the National media coverage of the "foreclosure scare". The REAL problems are in Nevada, Arizona, Florida, and California respectively.

Who's to blame you ask? That's a matter of debate.

• Banks lending money to home buyers who had no business buying a home in the first place. (Trust me I was one of them. Knowingly got a loan I couldn't afford for a home that wasn't really worth what I borrowed on it. Fortunately for me I was on my up the income ladder.)
• The job market. With more and more people losing their jobs, being laid off, taking pay cuts, and job openings becoming few and far between how are we expected to make our mortgage payments. This is a HUGE problem and it is not the real estate or banking / lending industry's fault!
• The inflated home prices of 2006-esque housing markets mostly. When you inflate a baloon too quickly and it bursts you deflate even faster (almost instantly). That's exactly what the National housing market is seeing happen.

The good news? We are not the national housing market.

Just 25 of Murfreesboro's current 1,384 real estate listings are foreclosures. That's 1.8% of homes on the market in Murfreesboro, and 7.15% if you count the 75 "short sales" that are trying to avoid being a foreclosure statistic.

Are you facing foreclosure? There is a way out. John Jones Real Estate is Middle Tennessee's first CDPE (Certified Distressed Property Expert).

We've set up what is undoubtedly the area's permier resource for avoiding foreclosure www.TheHomeSaverGuys.com. With tools, information, resources, and explanations that go in-depth to help you save your credit, save your home, and save you a lot of heartbreak, this site is your comprehensive resource.

Already received a foreclosure notice? Don't wait any longer. Call our certified experts NOW! 1-800-239-2513 ext. 2044

Imagine the following scenario...

You've listed your home for sale.  Within one day you receive multiple purchase offers at or near your asking price.  Negotiations take place until you come to terms on the sale with one of the buyers.  Everyone is happy; a dream-come-true.

That dream turns into a nightmare as the deal progresses toward closing.  The buyer's lender orders an appraisal as part of the loan process and everyone is shocked when the appraiser values the house for less than the proposed loan amount.  A transaction that has been rolling along has now skidded off the tracks.  Decisions have to be made.  Will the buyer pay the asking price even though it is more than appraised value?  Will the seller accept less in order to save the deal?  Can the two sides split the difference?

This unfortunate scenario has been playing out more and more often across Rutherford County in the past few months. 

Even though Murfreesboro's real estate market is relatively solid and has not been subjected to the drastic price fluctuations of other markets such as California, Florida, Arizona, Nevada, and Michigan, we are still forced to pay a price for their problems.  As consumers, lenders, and real estate professionals in those markets run for cover amid plummeting home prices and record foreclosure rates, the financial markets have tightened up all aspects of mortgage lending, including the appraisal process.

In the past few years, loose (in some cases out-and-out fraudulent) appraisals have played a significant role in the ability of people to refinance money out of their homes or wrap huge amounts of closing costs into their property purchases.  This was great when home values were on the upswing and sellers ruled the market.  Today, however, in a buyers' market with values flat or declining in some locations, appraisals have tightened up.  In many cases, unexpectedly low appraisals have been like the proverbial frying pan to the face of all participants in a deal.  Without a strong real estate professional involved, too many of these transactions fall to pieces as soon as the appraisal is delivered.

So what can you do to avoid or minimize the effect of a low appraisal?

1. Realize what the appraisal represents.  An appraisal is not what the house is "worth".  What the house is worth is determined by what a buyer is willing to pay for it on the open market.  In the above scenario, the agreed-upon price is what the home was worth.  The appraisal is the value upon which the bank is willing to base its mortgage calculations.  This may sound like we're splitting hairs.  In affordable neighborhoods and transactions where buyers have little cash to bring to the table, the bank appraisal might as well be the value because purchasers don't have the wherewithal to fork over extra money when the appraisal comes up short.  However, in higher-priced and unique homes, buyers are often more willing to make up the difference.

2. Be prepared.  If you're selling your home, consider paying for a pre-appraisal.  For a few hundred dollars, you can hire an appraiser to come up with a valuation of your home.  Having done your own due diligence, you have a stronger position to negotiate with potential buyers that the sale not be contingent upon the buyer's mortgage appraisal.  If the contingency is in place and the lender's appraisal comes in lower than yours, you have your appraiser's written argument as to why your home should be valued higher.  If your pre-appraisal comes in low, at least you know what you're up against so you and your Realtor can plan accordingly before you even put the house on the market.

3. Don't give up.  A low appraisal does not have to kill your deal.  If you're a buyer, you absolutely love the house, and you have the cash to come up with the difference, consider going forward with the purchase.  After all, you thought the house was worth what you offered when you offered it.  What has really changed since then?  If you're the seller, consider the cost of putting the house back on the market before refusing to come down on your price.  You will have the expense of ongoing mortgage payments, the inconvenience of keeping your house showing-ready, and the appraisal issue will still be in play the next time you get an offer.

4. When you hire a Realtor, don't skimp on experience.  A changing market like we're in now, is not the time to trust one of your most important investments to some rookie who's getting on-the-job training at your expense.  Choose a real estate professional or team that has withstood the test of time, excelling in all types of markets.  The John Jones Team has sold thousands of homes and at one time or another has faced just about every conceivable problem, concern, challenge, and roadblock a real estate transaction has to offer, including low appraisals.  We know how to deal with these kinds of situations and we'd love to put our years of experience and success to work for you.  Whether you are buying, selling, or just thinking about it give us a call at 615-867-3020 and we'll be happy to assist you with all your real estate needs.

If you sell your home, you only get one chance to be a “new” listing.  When it first goes on the market, many people who have been looking for homes similar to yours in style and price range will come to see if your house can become their dream home.  If you don’t WOW them on this first visit, many potential buyers will never give your house a second look.

Following are 10 inexpensive home makeovers that provide maximum impact on your home’s value and marketability:

1.) Green up the lawn and replace any overgrown bushes in front.  Black mulch with colorful flowers always looks good.

2.) Power wash vinyl siding, decks and patios and repaint the trim.

3.) Install or upgrade porch lights.  Add motion detectors to the corners of the house for added security.

4.) Assess your lighting.  If rooms appear dark, add lamps, new chandeliers, recessed, or track lighting.

5.) Keep things cool with attractive ceiling fans.

6.) Update bathroom lighting, toilet seats, medicine cabinets, and bathroom hardware so they look fresh and modern.

7.) Make your house look bigger through decluttering.  Put everything that is not essential into storage or the trash.

8.) Go ahead and buy that new sofa or dining room furniture for the new house now so it will improve the look of the home you’re going to sell.

A Quick Fix for Curb Appeal

Most buyers choose to drive by your home first before wanting to set an appointment to view. An attractive yard that is free of debris will gain interest quickly. Make sure that trees are trimmed and that your home can be seen from the street. Have the grass mowed, trimmed and edged. Walkways should be swept. Clean away all debris. Remove parked cars or RVs. When in season plant flowers to add color. This can make all the difference in the Murfreesboro TN real estate market. You want the first impression to sell your home.

Curb Appeal is half the battle in today's Rutherford County Market with more than 80% of buyers searching the internet, curb appeal not only affects potential buyers that drive by the property, but also has a huge impression on the MLS and other web portals. If the outside doesn't look attractive they'll click right on to the next property on the list.

Staging Without Breaking the Bank

The greatest way to show a home is to have a key available. In the Murfreesboro TN area, this is typically done by placing it in a secure lock box, provided to you by your Real Estate Professional. This will give agents, with prospective buyers easy access to your property and promote showings. Following these simple staging guidelines will also help:

By employing these successful staging strategies with an aggressive marketing plan, we can achieve a maximum sales price in the shortest number of days.

The Most Important Factor After Pricing:  Cleanliness

It's a common fact that clean homes net more money. Most people are turned off by even the smallest amount of uncleanness or odor when looking at homes to purchase. Sellers lose thousands of dollars because they do not adequately clean their homes or rid them of offensive odors.

If your home is squeaky clean, you will be able to sell your home faster and net more money.

If you are planning on moving, why not get rid of that old junk now so that your house will actually appear larger? Make more space. Odors must be eliminated, especially if you have pets, young children in diapers, or a smoker in the house. A little work now can pay huge dividends at closing!

A Little Fresh Paint Works Wonders

New paint makes the entire home smell clean and neat, and can bring sellers top dollar. If your home has chipped paint, exposed wood, or surfaces that look faded, it's time for new paint. If your carpet is worn, dirty, outdated, or an unusual color or style, you might consider replacing it.

Many houses do not sell because of these problems. Don't think that buyers have more money than you to freshen up a home. They typically don't. They will simply look elsewhere for a home that needs less work.

Give us a call and we can help YOU get YOUR HOME SOLD! 615-867-3020

Payment History – 35%

Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.). Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items). Severity of delinquency (how long past due). Amount past due on delinquent accounts or collection items. Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any). Number of past due items on file. Number of accounts paid as agreed. 

A score takes into consideration all these categories of information, not just one or two.

No one piece of information or factor alone will determine your score.

The importance of any factor depends on the overall information in your credit report.

For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles.

Your FICO score only looks at information in your credit report.

However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.

What's important is the mix of information, which varies from person to person, and for any one person over time. 

Your score considers both positive and negative information in your credit report.

Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score. 

This information is courtesy of Belinda Arender with F&M Mortgage in Murfreesboro, TN.

For more information about credit scores, to see if you qualify for a home loan, or just to see what mortgage programs are available, contact Belinda at belinda.arender@myfmbank.com or visit her webpage http://www.belindaarender.com.

If you or someone you know is in the market for a new home or thinking about selling a property in Murfreesboro Tennessee or the Rutherford County area please contact us anytime at 615-867-3020 or via email at John@JohnCJones.com

Martgage rates have been hovering around 40-year lows for the last two months. I have been asked by several past clients and friends the same thing, “should I re-finance?” The answer to that question is different for each person depending on their particular situation. But because we are seeing some of the best interest rates of my lifetime, I have decided to make a cheat sheet for all my friends and clients. (Actually I am stealing it from a great Realtor friend of mine)

Let me preface, I am not a mortgage broker, I am a Realtor. However, I do try and stay abreast of the overall economy and the ever-changing mortgage market. So I am giving you a basic overview of my opinions, by all means please do not take my word as the gospel.

This is straight to the point and I must give some credit to my good friend, Michael Maher, a Realtor in Kansas City. Thanks Michael!

In General! You should re-finance if:

• your rate is 6% or above on a 30 year mortgage
• you are in any kind of adjustable rate product (possible exception below)
• you are in any kind of interest only product
• you are planning on staying in your home for two or more years
• you want a chance to go from a 30-year mortgage to a 15-year mortgage
• you want a chance to go from a 15-year mortgage to a 30-year mortgage in order to save some money
• you want to consolidate some debt at a higher rate (credit cards, other loans,etc.)
• you want to skip a monthly payment during the next two months to pay down Christmas bills (when you re-fi, you typically have about 45 days without payment because mortgage interest is usually in arrears) DO NOT use the windfall money for disposable income, use it for some bill!
• If you have 20% equity in your home and this gives you the opportunity to knock off the private mortgage insurance (PMI)

If you have any further questions on whether this would be a good time to re-fi, please email me at johhn@johncjones.com and we will contact you promptly.

In General! You should not re-finance if:

• your current rate is fixed in the low 5’s
• you will moving in the next two years
• you are one of the lucky ones who have a mortgage that is tied to the prime rate (usually investor loans), some adjustable rates are also based on prime or a margin plus prime.
• your existing mortgage has a pre-payment penalty that the mortgage co. won’t waive
• the value of your home is less than your mortgage ( you are upside down)

There are exceptions to these rules!

A quick example to determine your break-even point

$200,000 loan
Current rate: 6%
Re-fi rate: 5%
Current Monthly payment: $1199.10
Re-fi payment: $1073.64
Monthly savings: $125 That’s GOOD!
Est. fees to re-finance: $3000 ( I can probably help you do better-think volume here)
Break even: 3000/125= 24 Months
• In this case, if you are planning on staying in your home for over two years it may be wise to investigate your re-finance options.
• Disclaimer: above mentioned fees and rates are estimates and your rate, fees and mortgage could differ based on your credit score, credit history and other factors. I am just here to help and council.

Rates could go lower ( I know of some 4.875% quotes as recently as last week), but they could also go back up. Last month they were hovering in the low to mid 5s until the Stimulus Bill passed. What I do know is the bond market usually adjusts ahead of when the public is hearing the Feds have lowered rates. So it is anybody’s guess if they will go lower or right back where they came from. I do know that they are still historically low right now! I just want try and help as many friends and clientele as I can by giving you this information. Hopefully this helps some of you take advantage of the incredible mortgage market we are currently in.

How do I claim the tax credit?

Complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return.

I purchased my new home in 2009 but before the bill was passed but I’ve already filed for the old $7,500 tax credit on my 2008 tax returns. Can I change to the $8,000 tax credit?

File an amended 2008 tax return with a 1040X form. Consult a tax advisor to ensure you file this return correctly.

Is it possible to take the credit on my 2008 return so I can use it as a down payment on a home I intend to purchase before December 1, 2009?

A prospective buyer who believes they qualify for the tax credit is permitted to reduce their income tax withholding. This will enable the buyer to build cash savings to use as a down payment (or however else you see fit) by raising take home pay.

”Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.”

Read more on this at http://www.federalhousingtaxcredit.com/

As I rummaged the net this morning I came across a few key components of the new $8000 First-Time Homebuyers Tax Credit that was recently signed in to legisilation that have been widely over looked by most reports on the bill.

The Economic Stimulus Package carries these additional attributes: 

1. Home buyers who would qualify for the tax credit, but who do not intend to purchase a home until the end of 2009, may elect to alter their tax withholdings (up to the amount of the of the tax credit) in order to save up money for a down payment. However, if the purchase of the home does not occur, the taxes must be repaid to the IRS.

2. The effective date of purchase for new construction (even if the buyer the lot) is the date the owner first occupies the house. So even if construction began in 2008, as long as the home and buyers qualify for the tax credit, they will be eligible if they take possession any time during 2009. However, new construction bought from a builder is only eligible if the closing date is between January 1, 2009 and December 31, 2009.

3. The law allows taxpayers to treat a 2009 purchase that qualifies under the bill as a 2008 purchase so that they can receive the tax credit on their 2008 returns.

4. The full amount of the eligible tax credit is refunded to the buyer, regardless of whether the buyer has paid an equivalent amount in taxes.

5. Familial transactions are not considered a valid purchase.

For some time now, the media has been bombarding us with stories of mortgage 'crisis', rampant foreclosures, and sub-prime banking woes.  The Nashville Business Journal featured a front page article (http://nashville.bizjournals.com/nashville/stories/2007/10/08/story11.html) about short sales and how they can be a solution for people facing foreclosure.

Unfortunately, many people have gotten in over their heads on their mortgages, and foreclosures have spiked to an all-time high across the country.  Here in Rutherford County, our real estate market has seen more than its share of mortgage defaults. 

So, if you're behind on your mortgage, what should you do?  First off, the worst thing you can do is nothing.  This is one problem where ignoring it only makes it much worse.  The best thing you can do is to arm yourself with as much information about the foreclosure process as possible.  Get with an attorney or Realtor who is knowledgeable in this area.  On the Jones Team, Joe Hafner (Learn more about him here: http://www.johncjones.com/About), our Operations Manager, has extensive experience working with people in foreclosure; helping them to get out from under their mortgage and save their credit from total destruction. He recently became Middle Tennessee's first and only CDPE (Certified Distressed Property Expert) and one of only three in the state.

One of the tools available to homeowners facing foreclosure is something called a "short sale."  Sometimes a home that sells for fair market value does not generate enough revenue to totally pay off the loans against it as well as all of the real estate and closing fees required to close the sale.  In these instances, the bank will sometimes agree to release its lien on the house for less than the amount owed on the loan.   

If you "owe more than your house is worth," you may be a candidate for a short sale.  There are potential restrictions and tax implications, so make sure you fully understand what you're getting into before you start the short sale process.

Helping a homeowner navigate through the short sale process usually requires specialized expertise as well as plenty of patience on the part of the Realtor and the homeowner.  However, a successful short sale can be a life and credit saver for the homeowner drowning under the weight of his mortgage. 

If you're facing foreclosure, John Jones Real Estate has the expertise and resources to help.  Please don't let embarrassment keep you from protecting your house and your credit. For additional information regarding Short Sales, the foreclosure process, and the options available to avoid foreclosure visit http://www.thehomesaverguys.com or call our 24 hour hotline for FREE recorded information at 1-800-238-2513 ext. 2044

The magic number for the rate of return considered strong when investing in the stock market is 10-12 percent.  What if I told you there was an investment you could make right here in Rutherford County that has historically delivered more than triple that 10 percent return on your money?

Believe it or not, this fantastic investment is residential real estate.  Allow me to lay out a realistic scenario that demonstrates the power of putting your money in rental properties.

Imagine you buy a single family home in Rutherford County for $120,000 with a 20 percent down-payment of $24,000 out of your pocket.  On the remaining $96,000, you get a 30-year amortized loan at seven percent interest (you can likely find a lower rate right now), which has a monthly payment of $640.  Add $1,500 per year to cover insurance and property taxes and your total payment comes to about $765 per month.

It is possible today in Rutherford County to pay about $120K for a home that rents for $950 or more per month.  If your purchase is in this category, it will produce a monthly cash flow (rent minus expenses) of $185 per month.  In many cases, this cash flow completely covers other non-regular expenses that occur, such as repairs, property management, etc.

Now let's say that your rental property appreciates in value an average of three percent per year, which is less than the average annual home appreciation in Rutherford County over the past 10 years.  With this conservative estimate, in 10 years your home will be worth $161,270, or $41,270 more than you paid for it.  Additionally, your principle balance on your loan will have dropped to $82,380 -- that's $13,620 your loan has been paid down by your tenants through their rent.

Overall, you will be sitting on $78,890 in equity on the house.  Remember, your original cash investment was only $24,000.  This means the value of your investment has more than tripled in just 10 years with an annual return of 32.9 percent on average.

How's that for putting your money to work for you.  There is no other investment that allows you to leverage your money like real estate.  Of course, being a landlord is not for everyone.  This investment is a little more involved than sending a check to your stockbroker.  However, you can take much of the stress of owning rental property off your own shoulders by hiring a skillful property manager and giving him the space he needs to do his job properly.  And, there is something comforting about being able to see and touch your investment. 

If you'd like to know more about investing in real estate, including how to buy property in your SEP or 401K, contact us.  We'd be glad to help you figure out whether being a landlord is right for you.

Why Would a Lender Accept a Short Sale?

“A bird in the hand is worth two in the bush.” 

One of the most common misconceptions many homeowners have is that their lender is lying in wait for the perfect opportunity to jump out and take their houses from them.  Nothing could be further from the truth.  In reality, mortgage companies are in the finance business, not the real estate business.  They do not want their potential clients’ property.  In fact, a foreclosure has far-reaching financial and regulatory consequences of which the average homeowner is not even aware.

The True Cost of a Foreclosure

When a bank gets a property in foreclosure it is taking on a ton of unwanted expenses including legal fees, taxes, insurance, utilities, maintenance, repairs, homeowners association dues, real estate commissions, and closing costs.  The truth is that on average, it costs a lender $60,000 to $100,000 to foreclose and dispose of the average $200,000 property.  This doesn’t even take into account the opportunity cost the bank incurs by having assets tied up in the house.

In comparison, with a successful short sale, the lender can save significant capital by avoiding some legal fees, property management expenses, and quickly turning a non-performing asset into cash it can use elsewhere.  In fact, in most cases a bank is actually better off with a below-market-value short sale than a full-market-value sale of a property it took in foreclosure. 

Also keep in mind that with a foreclosure the financial situation could end up many times worse for the lender if the property declines in value, needs extensive repairs, a tenant needs to be evicted, or any of myriad other potential expenses arise.  A short sale is a sure thing that allows the lender to keep the property off its books.  It simply makes sense for the bank to avoid further financial exposure by cutting its losses with a successful short sale.

Short Sale Qualifications

It is estimated that most American Families

can only maintain their current living expenses

for 60 days or less when income is interrupted for any reason.

In order for a bank to accept a short sale, you must have a demonstrable financial hardship.  You will have to prove this hardship through a signed letter that will be submitted to the mortgage company along with additional documentation.

What is an Acceptable Hardship?

A hardship can be defined as a material change in your financial situation that is or will affect your ability to pay your mortgage.  Without a hardship, it is highly unlikely the bank will consider accepting a short sale on your property.  Following are some examples of hardships most banks consider acceptable:

Payment Increase or Mortgage Adjustment

This is the single largest reason for distress in today’s market.  Although mortgages increase on a schedule and owners know the higher payments are coming, many people don’t or can’t react until it’s too late.  Or worse, they do nothing because they think they have no options.

Loss of Employment

When an individual loses employment, the loss of income is most often immediate.  Financial distress can occur very quickly and seem insurmountable.

Business Failure

For a small business owner, the devastation of a business failure is often followed by the inability to pay mortgage payments and the loss of their home.  In our area especially, contractors and subcontractors involved in the home-building industry have been hit especially hard.

Damage to Property

Many times insurance companies do not cover the full amount of damage to a property and homeowners are unable to make repairs.  Some homeowners have to use insurance funds to survive and find new living arrangements.

Death of a Family Member

The death of a family member is devastating in many ways other than financial.  However, if the person who passes was also one of the—or the only—wage earner, financial distress will almost always be added to the family’s troubles.  Even if that person was not a wage earner, his or her death can still throw the family into emotional and financial turmoil.

Severe Illness

Severe illness or injury and the medical bills involved, as well as the time it takes away from a family’s productivity, can cause bills to be missed and homes to go into distress.

Inheritance

Rarely does someone think of an inheritance as a means for distress, however heirs are left to pay mortgage bills, utilities and maintenance that they did not expect.  Imagine a son who makes $60,000 per year whose parents pass away and leave him a $700,000 mortgage and payments on a $1.5 million property.  He will quickly need to find a payment solution (which there may not be) or liquidate the property to satisfy the mortgage.  As you can see, even properties with significant equity can get into danger of being lost to foreclosure if a timely solution is not implemented.

Divorce

It goes without saying that divorce is one of the most common reasons for financial distress in the real estate market.  Even when amicable, these situations can become challenging, especially for third parties (such as Realtors) because both spouses have to be involved and in agreement in order for solutions to be implemented.

Separation

When a couple decides to separate even though they are not actually divorcing, the cost of maintaining two households can lead to the loss of the primary residence.

Relocation

Homeowners do not always have control over where they live; many relocations are necessities, not choices.  This can quickly cause unexpected distress since very few homeowners can support two households for any significant length of time.

Military Service

Except for the relief provided in very specific situations by the Servicemembers Civil Relief Act (SCRA), military service can lead to unexpected financial issues.  Servicemembers who have had their periods of active duty extended are suffering a tremendous amount of financial pressure.

Insurance or Tax Increase

For many homeowners, just the increase in taxes on an annual basis or the increase in an insurance payment can cause a family to lose a home or go into financial distress

Reduced Income

If a person is in a commission-based business (real estate, insurance, auto sales, etc.) and the economy suffers, often times their income suffers as well.  Also, many businesses are reducing employee compensation or cutting hours to make up for lost revenues companies have suffered.

Too Much Debt

For a family with credit card debt, even minor increases in their interest rates can mean the difference between paying their bills and missing payments

Incarceration

Time in jail means loss of income and freedom, and usually includes sizable legal bills.  Obviously, no income and additional debt puts the home at risk.

Insolvency Requirement

To qualify for a short sale, you must be financially insolvent.  This means that you have to owe more than you have or that you do not have liquid cash or assets that could be used to buy down the mortgage.

If you do have liquid cash or assets, the bank will expect you to use them to pay down your mortgage.  The bank may be willing to cover any remaining shortfall if you contribute your available liquid assets yet still fall short of the cash required to cover the loan.  This only makes sense since lenders view short sales as a tool for you to use only when you truly can’t pay your mortgage.