California Short Sale Versus Refinance Loans
Short Sales Can Help California Homeowners Avoid Foreclosures

When you have the opportunity to refinance into an affordable fixed rate mortgage, we recommend you make the move. California short sales help prevent foreclosures for bad credit homeowners behind on their mortgage payments who are unable to refinance. Unfortunately thousands of California homeowners could not foresee the recent subprime mortgage debacle that has turned the home lending industry upside down. The secondary market for jumbo home loans is almost non-existent and that support a majority of the home financing in the state. The FHA secure refinance loan has helped thousands of struggling borrowers, but mostly outside of California because the FHA loan limits restrict mortgage refinancing above $362,900.

You say you've never heard of a short sale? Well, if you live in California, the chances are you will be hearing more and more about them. They are one of the prime ways that lenders and borrowers work together to keep a home loan default from turning into another home foreclosure. We work with realtors, lenders and processors who have experience closing on short sales in San Diego, Riverside, Los Angeles, Fresno, San Luis Obispo, San Francisco and Orange County.

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Nationwide offers Short Sales Expertise to Prevent a foreclosure.

In a short sale, the lender agrees to accept less than what is owed on the property in order to avoid having to foreclose. The property owner gets to walk away without a foreclosure on their record, although it does still hurt their credit rating. The lender gets a bad loan off their books without having to take the property back. The buyer gets the property for less than the seller owed to the lender.

When the property value has dropped and the property is really not worth the amount of the loan against it and will not sell for that much, then a short sale is a win-win for everybody involved. For example, Tom and Mary bought their house for $600,000 with little or no money down. Now they cannot afford the payments and want to sell the house, but the most they can get is $550,000. The lender will lose money by accepting a short sale, but the lender would likely lose even more money if they had to foreclose.

What is the best way for California homeowners to refinance if their mortgage if their home has recently lost equity?

Homeowners across the state of California are in flux because of their recent loss in home values. Homeowners who last year were at 75 or 80% loan to value find themselves trying to refinance their adjustable rate mortgage at 90%. Some California consumers saw their 90% loan to value turn to 100 or 10% loan to value. Borrowers in this position need to be working with experienced loan officer who understand how "High LTV" refinancing as well as combination loans. And for borrowers with 1st loans amounts less than $362,000, FHA has emerged as a wonderful refinance solution. FHA loans can be refinanced to 97% for rate and term loans and 95% if cash is taken out in the transaction. Borrowers with jumbo home loans that exceed $417,000 will have to refinance with a 1st and 2nd mortgage combination unless their credit scores are high and their income is solid.

California's Riverside County leads the nation in foreclosures. It is also a leader in short sales. This is not exactly a statistic to be proud of or happy about. Bad credit, rising interest rates falling prices and/or a lack of equity are making it harder for many people to dig their way out.

Homeowners in California are struggling to find mortgage refinance loans to prevent a foreclosure.

Fixed mortgage rates have been rising. This has caused many homeowners to forgo the idea of refinancing and turn instead to a second mortgage for purposes of debt consolidation. Many other homeowners get cash with a second mortgage to avoid foreclosure. But for too many of these people

They can't afford the payments on two mortgages and so they make the payments on the first and let the second mortgage slip into default. Or they do the opposite. They keep up the payments on the second mortgage, but not on the first mortgage. Either way, they soon find themselves find themselves facing a second mortgage foreclosure. Often, a short sale, is the only permanent solution for homeowners trapped in homes they can't afford to keep and can't sell for what they paid for them.

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