What is a short sale? Let’s break it down. Say you’re selling your home; however, the offer you get is so low, it won’t cover the total amount you owe on your mortgage. But you need to unload it, so you’ll take it. This is a short sale—simply put, you end up “short” on paying back your lender, and the bank agrees to accept less than what’s owed on the loan.

According to the most recent data from real estate information company RealtyTrac, 5.1% of all single-family home and condo sales in early 2016 were short sales. Often homeowners are pushed into a short sale by personal financial troubles that make it impossible to pay their monthly mortgage. At the same time, they find it hard to sell at a price that would enable them to pay off their loan—especially if local real estate market trends have driven down their home’s value. This happened in many communities across the nation during the housing bust of 2008.
While selling a home under such circumstances is hardly ideal, many experts argue it’s smarter than pursuing more drastic measures like bankruptcy or foreclosure. Here are a few of the benefits of a short sale for a distressed home seller:

Short sales do way less damage to a homeowner’s credit report and credit score than a foreclosure. This means they’ll be in better shape to apply for a mortgage and buy a new home down the road.
Homeowners have the dignity of being able to sell their own home. This is no small thing.
Short sales enable homeowners to stay in the home until the sale is completed. Foreclosures force homeowners to vacate.
While a seller typically pays all real estate agent commissions and other closing costs, in a short sale the seller pays nothing; the bank foots the bill.

How short sales happen

They start off just like any other home sale: You contact a Realtor® (ideally one who specializes in short sales), list your home (mentioning that it’s a “short sale/subject to lender”), then wait for an offer to come in. But once you accept, things get tricky. You’ll need to get your bank’s blessing—and since lenders lose money with short sales, they’re rarely eager to hop on board.

“Some banks may even prefer to foreclose, since they not only assume ownership of the property but may receive bailout money from the homeowner’s mortgage insurance policy,” says Marlene Waterhouse, a Realtor and the owner of Short Sale Solutions. On the other hand, a short sale may appeal to a bank, since owning and selling property are hassles it may prefer to avoid.

To assess whether to approve your short sale, banks will require you to submit some paperwork, including your offer letter as well as a “hardship letter” explaining why you can no longer make your mortgage payments, along with financial documents such as income statements or medical bills to back that up. At that point, they will most likely have your home appraised to determine if the offer you’ve received is fair. If it is, they may allow the deal to go through, although they may have some stipulations (more on that next).

How buyers can benefit

Short sales can be bargains for home buyers, but prepare to jump through a whole lot more hoops than with a typical sale.

“I wouldn’t recommend them for first-time buyers, who may get frustrated with the extra paperwork and long waits,” says Waterhouse. “A traditional sale takes 30 to 45 days to close after the offer is accepted. A short sale typically takes 90 to 120 days, or even longer.”

The reason for these holdups is that the lenders—which are stuck paying for closing costs that a seller would typically cover—will often counter with their own demands in an effort to raise their bottom line. So, buyers might hear, “We’ll accept your offer, but you’re responsible for all repairs, wire transfers, and notary fees.” Go ahead and negotiate, or walk away if you aren’t satisfied with the terms of the deal; ultimately it’s up to you to decide whether it’s worth it to absorb these extra costs. When in doubt, ask your Realtor to help you crunch the numbers.

Bottom line? Short sales can be a viable solution for some. Done right, sellers, buyers, and the bank can all walk away happy.

We know. You have all these great intentions of spiffing up your house, cleaning this, updating that, and decluttering EVERYTHING.

But, before you know it, the kids will be out of school, and June will turn into July in a blink. Throw in a couple of pool parties and a family vacation, and before you know it, you'll be buying school supplies again.

No need to get anxious or give up and getting all those have-to's done. Here are 10 things you can easily take care of this weekend so your summer to-do list doesn't get lost in the shuffle.

1. Execute an air conditioner check

If you haven't had to turn on your air conditioning yet this year, do a little self-congratulatory dance and then flip it on and make sure everything is working properly. You don't want to find out you need a new fan belt on the first hot and sweaty day of the year.

2. Check out the area around your air conditioning units

If weeds or other plants have grown up around your AC units, you may want to trim them back. "Air conditioning units and heat pumps require plenty of air circulation to work efficiently, so it's important to keep shrubs trimmed back away from the unit," said Today's Homeowner. "Make sure there's at least 18" of room around the sides of the air conditioner, and three feet or more above the unit."

Ugly House Photos
3. Do a ceiling fan once over

Now, go room to room checking all the ceiling fans to make sure they're in working order. But before you turn them on, note the dust level. If you haven't used them in a while, dust and dirt may be ready to fly off as soon as they get going. An old pillowcase spritzed with cleaner, then thrown over each blade and slid off is a great trick to get them clean without special tools.

4. Check those filters

Lastly - as it relates to your air conditioning - inspect your air filters.

If they're not changed out regularly, and, especially if you can see visible dirt, hair, or malformations because the filter is starting to pull into the unit, get yourself to Home Depot (and don't forget to measure first so you don't have to guess at the size while you're in the store).

5. Don't forget about your refrigerator filters

Filters in your refrigerator and icemaker are usually supposed to be replaced every six months (but check with your manufacturer). If it's been at least that long, change them out. The fresh taste of your water and ice will be worth the effort!

Marathon Air
6. Clean your refrigerator coils

If you've never done this, you may be surprised by how gross they can get. But keeping your coils clean by shutting off the power to the unit and vacuuming the coils through the back can extend the use of your refrigerator and also save you money on your electric bill - up to $100 a year!

7. Refresh your showerhead

If your shower isn't providing a strong stream of water anymore, it might not be your water pressure. Try cleaning the showerhead to remove mineral deposits. All it takes is a baggy full of vinegar tied around the showerhead and left overnight to soak. In the morning, run the water to see if it's made a difference.

8. Check your sprinklers

Lots of things can cause part or all of a sprinkler system to fail, and you'll want to know if you need to call a repairman because it's blazing hot outside. Today's Homeowner offers this tip for testing your sprinklers: "Place straight-sided tuna cans on the ground around the yard, and run your sprinkler as usual. If your irrigation system is set right, all of the cans should be filled to the same level."

While you're at it, check your hoses for leaks. Replacing leaky hoses can save water, and save you money.

9. Check your deck

"Look over your deck for signs of rotting and hammer in any nails that are poking up," said The Nest. "Then, determine if your deck needs sealing. Sprinkle water on the deck's boards. If the water beads up, you're in good shape; but if it soaks right in, it's time to reseal that sucker."

10. Mulch it

A layer of mulch in your yard will help "keep weeds down and help the ground retain its moisture in the heat," said The Nest. More importantly, it's one of the quickest, easiest, and cheapest ways to up your curb appeal - and that's important whether you plan to spend many more seasons in your home or you're thinking of getting ready to sell it.

The Mortgage Professor

Lease-to-own contracts and land contracts are different legal ways to transfer occupancy of a property from an existing owner who does not want to occupy it to someone else who does but cannot immediately qualify for the financing required to purchase it outright. Both lease-to-owns, known as LTOs, and land contracts, known as LCs, offer wannabe owners the right to occupy a house for a period during which they can improve their capacity to qualify for the financing they need to complete the deal.

Note: The LC designation includes what are called contracts for deed, which are used in the same way. Detailed provisions of both vary from state to state.


With an LTO, the new occupant becomes a tenant and the current owner becomes a landlord who offers the tenant an option to purchase the house within a specified period. The tenant will need a purchase mortgage when the time comes.

As an example, let's look at a house appraised for $100,000, a price a potential buyer finds acceptable but cannot afford right away. The renter/buyer has the right to occupy the house with an option to buy anytime within 18 months for $100,000 in exchange for a nonrefundable option fee of $1,500 and monthly rent of $900 for 18 months. If the wannabe buyer cannot qualify for the mortgage required to exercise the option within the 18 months, her option lapses and she must vacate at the end of the period.

The LTO offers the wannabe homeowner an opportunity to bet on herself. To become a homeowner, she must either improve her credit score or accumulate the funds required for a down payment on a purchase mortgage, or both.

The LTO offers the seller a chance to obtain a better price than is otherwise available. If it turns out that the buyer cannot complete the transaction, the seller retains the option fee and rent, and recovers the house, perhaps to offer it again to another wannabe owner. If the seller had a mortgage, it would not be affected by an LTO that fizzled.

Price changes that occur during the option period do not benefit the wannabe owner. If the house declines in market value, a purchase at the option price becomes less attractive. If the house appreciates in value, purchase at the option price becomes more attractive, but the capacity to make the purchase will not increase. The maximum available mortgage amount will be based on the option price, not the current market value, so that the required down payment will not change.


With an LC, the new occupant purchases the property with financing provided by the seller, who becomes a lender. But legal title does not pass until the loan is paid off, which requires the new occupant to refinance.

As an example, under the LC, the wannabe buyer pays $100,000 for the house, including $1,500 in cash as a down payment, with the seller providing a loan for $98,500. The monthly payment of $900 covers the principal and interest plus taxes and insurance, with the loan balance of $96,658 after 18 months due at that time. If the wannabe buyer cannot refinance, the owner does not transfer legal title and can take steps to have him evicted.

To wannabe owners, an important difference between LTO and LC deals is that completing the first requires a purchase mortgage while completing the second requires only a refinance of the mortgage granted by the seller. Closing costs are lower on a refinance, and the down payment required is smaller. The $1,500 that went into the seller's pocket as an option fee on the LTO became buyer equity on the LC.

Furthermore, since the equity required on the refinance is based on a current property appraisal, an increase in market value during the 18 months will reduce and could even eliminate the need for the buyer to come up with additional cash. In the example, a lender imposing a 10 percent equity requirement on refinances would refinance the entire $96,658 balance after 18 months if the market value of the house had risen to $107,500.


As a delayed consequence of the financial crisis and the marked rise in foreclosures that followed, large numbers of homes that had been in foreclosure are now being marketed with LCs. Rising home prices in many areas are encouraging this process, and many wannabe homeowners of modest means are being offered homes at prices that look like great bargains. I asked my colleague Jack Pritchard, an ex-mortgage banker who knows every trick of the trade, how potential buyers of foreclosed homes should protect themselves against disappointment. This is his advice:

_Have a title company or closing attorney verify that a) there are no senior liens on the property, and b) your contract of sale has been recorded. This will cost about $150, but it eliminates the risk of your having to pay off the seller's debt, and it positions you for the refinance you will need to pay off the seller.

_Find a way to make the monthly payment before the due date every month. This eliminates the risk that the seller will call a default if your payment is one day late in order to take the property back and sell it to someone else.

_Make your payments to the seller in a way that can be easily documented - for example, by check. This will ease your way to the refinance you will need to distance yourself from the seller.

Veterans, service members, and their families believe in homeownership. In fact, the homeownership rate among veterans far outpaces that of civilians.

But the financial toll of military service can make it tough for some veterans to get a financial foothold, let alone land a home loan.

The good news is those who serve have access to a host of home-buying benefits and protections, from what’s arguably the most powerful home loan on the market to financial safeguards and more.

VA loan program

Since the VA loan program’s inception in 1944, the Department of Veterans Affairs has backed more than 21 million loans for veterans, active-duty military members, and their spouses. This program has made buying a home more accessible to those who most deserve the American dream they helped build and protect.

VA loans feature many benefits that help make home buying possible, including the following:

No down payment requirement
No mortgage insurance
Lower average interest rates
Limits on closing costs
More lenient credit requirements

VA home loans have boomed in recent years, attracting many veterans and military members who may not qualify for conventional loans, which have stricter credit requirements.

Still, many eligible buyers are unaware of the benefits of VA home loans and the protections they offer. Some buyers also make the mistake of assuming a government-backed loan comes with endless red tape and miss an opportunity to benefit.

Typically, veterans and active-duty service members are eligible for a VA home loan if they served in the following capacity:

90 consecutive days on active duty during wartime
181 consecutive days on active duty during peacetime
6 or more years in the National Guard or Reserves

Some spouses of military members who died in the line of duty or of a service-related disability may also be eligible for a VA loan.

Talk with a VA lender about obtaining your Certificate of Eligibility and getting a sense of your purchasing power.

Occupancy & power of attorney

VA loans are focused on getting buyers into homes they’ll live in full time. But the program makes exceptions for some veterans and active-duty service members.

For example, a spouse or children may be able to fulfill the occupancy requirement on behalf of a VA buyer. Also, a VA buyer who is deployed or otherwise unable to manage the loan process can typically assign a power of attorney to a spouse or family member to manage the loan process and sign documents.

There are two types of power of attorney: general and specific. The type needed depends in part on what loan-related documents the VA buyer can sign.

The occupancy and power of attorney options mean an eligible VA buyer’s spouse and children could buy a home during a deployment or unaccompanied assignment, helping alleviate the emotional toll of multiple moves on military families.

Basic allowance for housing

Many active-duty military members who receive a monthly housing allowance are surprised to learn that they can use this money to qualify for a home loan. Lenders can count Basic Allowance for Housing (BAH) as effective income. That can help service members make the leap from renting to owning, especially in higher-cost areas.

BAH is based on several factors, including the location of your duty station, your pay grade, and your family size. The housing allowance can change on an annual basis. To calculate your BAH, refer to the BAH calculator on the Defense Department’s website.

Financial protections

Even after becoming homeowners, active-duty service members can face unique financial challenges. Deployment and changes of station can strain a family emotionally and financially.

The Servicemembers Civil Relief Act (SCRA) provides active-duty military personnel and their families financial protection involving interest rates, income tax payments, eviction, foreclosure, and more.

For example, military personnel can ask creditors—including their mortgage lender—to cap their interest rate at 6% during their term of service. The SCRA also forces lenders and servicers to seek a court order to foreclose on active-duty military members during their time of service and up to nine months afterward.

Veterans Affairs also offers foreclosure avoidance protection assistance for homeowners. The VA has a team of experts who work with lenders and servicers on behalf of struggling homeowners to find alternatives to foreclosure. Their efforts have helped nearly 500,000 veterans and service members avoid foreclosure in the past six years alone.

Check with your local Armed Forces Legal Assistance office for more information regarding the Servicemembers Civil Relief Act. VA homeowners in jeopardy of defaulting on their mortgage can contact the VA loan program at 877-827-3702.

This article was written by Chris Birk, director of education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”

While we often jump through hoops to protect our home from burglary and fire, we may neglect to protect it from the thing most likely to damage it: Wind.

According to data released Wednesday by insurance company Travelers, wind damage is the most common cause of homeowner’s insurance claims, ahead of hail, water, theft, fire and more. And yet, it’s one of the things many of us are least likely to protect our homes against, says Scott Humphrey, the second vice president of risk control at Travelers: “People don’t think about wind that much.”

5 most common causes of homeowner’s insurance claims

Percentage of claims related to each cause

Exterior wind damage 25%
Non-weather-related water damage (i.e. plumbing and appliance issues) 19%
Hail 15%
Weather-related water damage 11%
Theft 6%
Source: Travelers

Instead, they tend to focus far more on things like fire (buying and maintaining smoke alarms, for example) and theft (getting good alarm systems and locks)—both worthy concerns, but still less likely than wind to damage your home.

Wind can damage your home in a number of ways. Among the most common, says Humphrey: Wind detaching tree branches and hitting the home, wind lifting up roof shingles or damaging windows and doors and wind throwing things like patio furniture and other detached items in your yard.

There are ways to protect you home from wind damage. If a storm is coming, secure your windows with plywood, bring in lawn furniture, secure your garage with vertical braces and remove dangling branches, says Crissinda Ponder, the real estate analyst for financial website Repair or replace loose or damaged shingles and ensure you have good door bolts so doors are less likely to fly off, she adds.

Make sure you have enough homeowners insurance, which is highly dependent on how much your home is worth, says Penny Gusner, the consumer analyst with insurance website Get enough coverage to pay for the cost to rebuild your home, she adds. Ideally, you also want enough personal property coverage to pay for the replacement value of your possessions and enough liability insurance to cover the value of your assets in case you’re sued, Gusner says. (If you need more than what your homeowners policy covers, add on an umbrella policy.)

The good news: Wind damage is covered under most standard home insurance policies, Gusner says that homeowners in coastal and hurricane-prone areas may have wind damage excluded from their policies. “If you find that it is excluded, buy a separate windstorm policy,” she says. Even if wind is covered, make sure you look into the deductible, Gusner adds: “If winds are hurricane-strength that harms your home, you may have a hurricane deductible kick in, which is higher than your normal deductible. Hurricane deductibles don’t tend to be flat amounts. For example, if your home is insured for $250,000, and your hurricane deductible is 5%, you’d have pay out $12,500 before the coverage started.