A short sale is a sale of real property for an amount less than the unpaid balance of its first mortgage. Once costs such as real estate commissions, escrow, and title are passed along to the lender (who agrees to accept the proceeds as payment in full, despite the shortfall), the sale progresses.

Such a sale requires the consent of the lender and may create taxable gain for the seller — to the extent of the debt forgiven by the lender. Short sales have become a popular alternative to foreclosure, and are a more credit-friendly option.

Sellers who are considering a short sale should negotiate a payoff with their lender first before listing the property. This will help to determine the sales price. In addition, this will streamline the process, as it will make it faster and easier to close once a buyer has been found.

For buyers, short sales can involve a little more paperwork but overall, they are a great way to obtain a good price on a property.

When considering a short sale, make sure to involve a mortgage advisor, realtor, and attorney early in the process. They will  provide guidance lead buyers through the appropriate steps to make the transaction as simple as possible.

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Welcome radio audience! Our Radio Response Team has been diligently getting the word out about the great purchase and refinance opportunities available. We are offering a 30yr fixed rate mortgage at 4.875% (APR is 4.920%, based on a $300,000 loan). This will allow buyers to take advantage of the hottest market in history and homeowners to capture some of the lowest interest rates of our lifetime.

We are also offering FHA, cash-out and debt consolidation loans for up to 85% of the value of your home!

If you have heard the WBBM radio ad and are not currently working with a PERL Mortgage Advisor, please contact the “Radio Response Team” in our Deerfield West group at 847.714.9700 or visit their bio page for additional contact information.

Note: Rates are subject to change. Conditions such as credit, down payment and loan size are key factors in determining rate. Please call us to get a rate quote for your individual scenario. PERL Mortgage is an Illinois residential mortgage licensee MB0004358 and Equal Housing Lender.

Market Comment
We saw an increase in stock values last week, causing mortgage bond prices to fall and mortgage rates to rise. Despite market data releases indicating continued economic weakness, the DOW shot towards the 8,000 mark. Unemployment levels increased, contributing to a growing trend of lower consumer spending.

For the week, interest rates on government and conventional loans rose by about 3/8th of a discount point.

On Thursday, the bond market will close early in advance of Friday’s market holiday. The shortened trading week may result in mortgage interest rate fluctuation as traders position themselves ahead of the long holiday weekend.

Credit Demand
In today’s mortgage interest rate market, inflation is a key indicator. The Federal Government continues to print and spend money in an attempt to fuel the economy and keep mortgage interest rates relatively steady and low.

Interest rates levels reflect the balance between the supply of money from investors, and the demand for money by borrowers. Rising expectations of inflation — coupled with uncertainty about debt performance — can cause investors to require higher rates of return on investments. Regardless of inflation levels, rising economic activity can increase the demand for investors’ funds — and thereby lead to higher interest rates.

As the economy struggles, the demand for money diminishes, so The Fed lowers interest rates to entice businesses and consumers to increase their borrowings. The Fed hopes that manufacturers will increase investments in plants, equipment, and inventories — and that consumers will push along housing construction, spending, and consumer debt.

Analysts will monitor this week’s consumer credit levels as economists, market analysts, and traders will likely formulate different opinions about the future state of the economy. Though a majority of those influencing conventional wisdom foresee continued fluctuation, now is a great time to take advantage of these historically favorable rates!