Large Cash Incentives provided by Lenders for Short Sales

With large cash incentives of around $2,000 to upwards of $35,000; Lenders are luring the homeowners who are upside down on their mortgage to Short Sales rather than Foreclosure.

In recent news, major publications including USA TODAY and CNNMoney have spotlighted the incentives provided by banks. These incentive programs are intended to provide homeowners with the resources and motivation to pursue a short sale.

As banks look to ramp up Short Sales, such incentives are becoming more frequent. JPMorgan Chase began their incentive program last year, for example, and Bank of America (which plans a 60-70% increase in short sales this year) piloted a program in Florida this past December. Wells Fargo offers incentives as well, though primarily in states where the foreclosure process is particularly lengthy.

For banks, short sales can be a cheaper alternative to foreclosure. The foreclosure process is lengthy and costly, so much so that providing up to a $20,000 alternative for a Short Sale is still a cheaper option.

In addition to the cost of the foreclosure process itself, foreclosed properties sell for less than short sales on average. According to the National Association of REALTORS®, foreclosed properties sold for 22% less than conventional sales, while Short Sales sold for around 14% less.

How to improve your credit report and scores.

If you are thinking about buying a home in the near future, or refinancing your existing loan,  your credit score will be used as a determining qualifying factor.

When buying a home, your credit score will be used to help determine whether or not you will get a loan and what you will pay for it. Your credit score may even determine the cost of insurance.

If you are considering refinancing to take advantage of low interest rates, most likely your credit score will help you qualify for this refinance.

It’s critical to know what’s on your credit report in this difficult economy.  It is especially important to know how to rebuild your credit report history after a financial setback.

You can request a free copy of your credit report here:

  • Equifax
  • Experian
  • TransUnion

You can order your free report from any of the companies above here:   Review each report carefully as each report may vary slightly which each company,

What factors are likely to influence your Credit Score?

  1. Whether you repay your loans on time.
  2. How much you currently owe on each account compared to it’s original loan amount or credit limit.
  3. How long have you had your current loans and credit cards.
  4. What types of credit cards you have, and how many recent “credit inquiries” you have.

How to improve your credit report and scores?

  1. Pay your current loans and other bills on time.
  2. Don’t automatically close accounts that have been paid in full or haven’t been used in awhile as this will lower your available credit.