Underwater Properties

Due to the economic downturn many property owners own property that is "underwater", where the amount owed on the property is greater than the property's market value.

Many owners struggle month to month to bear the burden of an underwater property, draining savings and children's precious college funds, throwing away hard - earned paychecks while suffering the emotional, psychological and in many cases physical strain of being drained by an underwater property.

If you are tired of the financial drain, the stress and the fear that your underwater property is causing, then negotiating a reduced pay - off with your lender may be the best thing you can do for yourself and your family. A professionally negotiated reduced pay - off, or "Short Sale" will allow you to sell your underwater property for less than the amount owed and get you back on the road to financial stability and put an end to those sleepless nights.

Some owners with underwater properties mistakenly deny themselves and their family the benefits of a short sale due to concerns about their three digit credit "score". Many owners have been mislead to believe that a short sale will "ruin credit" or leave them with permanent "bad credit" and that is simply not true.

A high three digit "credit score" is a source of pride for many but there is another "score" or number that is just as if not more important than the three digit "credit score" and that is DTI or debt to income ratio Try this, grab a pen, paper and a calculator;

First, add up your total net monthly income. This includes your monthly wages and any overtime.

Next, add up your monthly debt obligations. This includes all of your credit card bills, loan and mortgage payments etc.

Finally, Divide your total monthly debt obligations by your total monthly income. This is your total debt-to-income ratio.

If your debt to income ratio is around or higher than 0.30 (or 30%), despite a high three digit "credit score" many lenders may already consider you to have "bad credit" because your debt is too high in relation to your income. The effects of a high debt to income ratio can be the same as having a low "credit score" or "bad credit". Do not make the financially fatal mistake of throwing away thousands of dollars a month on an underwater property just to maintain a three digit credit score that is not nearly as important as you may have been lead or mislead to believe. Getting rid of an over -leveraged or underwater property can greatly reduce your debt to income ratio and actually improve your credit over time.

Another concern is the potential for a post short sale tax liability, though A. Leander & Company does not provide tax advice and we strongly recommend that you consult with a tax professional, the following link provides some very useful information on potential post short sale tax liability; http://www.irs.gov/individuals/article/0,,id=179414,00.html. Many owners are concerned that they will end up responsible for any deficiency balance left by a short sale. Should you choose to pursue a short sale, you cannot be forced to accept a settlement where you are responsible for any deficiency balance.

We have successfully negotiated multiple short sales for our clients and we can do the same for you! Do not throw away another dime or spend another sleepless night worrying about an underwater property. We do not charge any up - front fees and there is no out of pocket cost to you, our fee is paid by your lender at closing so call 312-254-5022 today and let us get to work for you!

A Leander & Co, LLC * Phone: (312) 254-5022 Fax: (312) 276-4394

IL licensed broker, license #481011235

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