4 Things You Didn’t Know About NJ Short Sales

A short sale occurs when a homeowner sells their house for less than they owe their lender. This normally happens when a homeowner needs to get out of ownership of the property during a down market or while working with their lender in an attempt to avoid foreclosure. Before you consider selling your home, here are some thing you might not know about NJ short sales.

1. You’ll Need Approval

In order to sell your home for less than you currently owe, you will need to get approval from your lender. Getting approved for a short sale is normally a matter of proving to your lender that you are unable to pay back the home loan in full due to financial hardship or a major life change (like illness, divorce, job loss, or a sudden need to move). The lender will approve or deny your request for a short sale based on the loss they anticipate taking and your financial circumstances. If the short sale is likely to make them more money than if they let the house go through the foreclosure process, it is a smart move for the lender and they will likely approve the short sale.

2. The Short Sale Process is Lengthy

Don’t expect to be able to sell your home quickly through a short sale. The process can take on average nine months to be completed. Because your lender will have an active involvement in approving buyers and negotiating the terms of the sale, there is more back and forth between all involved parties than in a traditional property sale. It can also be difficult to find motivated buyers who are willing to wait, meaning you’ll spend more time with your home on the market.

3. Your Credit Score Will Drop

While a short sale can protect you from foreclosure, it will still impact your credit score. Depending on where you started, a short sale can drop your score 100-150 points. A lower credit score will make borrowing more difficult and can cause your interest rates to increase. The good news is, despite this heavy impact, you will be able to bounce back quicker from a short sale than a foreclosure. Most people who go through a short sale find themselves eligible for another home loan in a few years.

4. The Right Real Estate Agent Can Make a Big Difference

If you are trying to sell your home via short sale, the process is a lot more involved than a standard for-profit sale. There is added paperwork and additional steps that need to be taken that can be confusing if you are not a real estate pro. An agent and/or attorney experienced in short sales will be able to guide you through the process. Hiring professional guidance is an added expense, but they know how to present short sales to lenders for a better chance at approval and can give you tips on how to make more on the sale in general. You’ll see a return on your investment when your home sells for closer to what you owe on it.

The short sale process can be long and full of ups and downs. If you are facing foreclosure and considering a short sale, Veitengruber Law can help. We network with real estate agents experienced in short sales and provide a full array of real estate attorney services in Central New Jersey and the Jersey Shore.

 

How Virtual School is Changing NJ Real Estate Needs

As the coronavirus pandemic has more kids receiving virtual schooling, students working from home need to have a designated space for doing their schoolwork. Discerning homebuyers with no way of knowing when their children will be returning to in-person schooling, are keeping this in mind in their home search. Whereas previously parents could rely on classrooms, playgrounds, and rec centers to fulfill their children’s educational and recreational needs, social distancing precautions have changed this. If you are looking for a new home with school aged children, here are some things to keep in mind for your NJ real estate wish list.

1. Multi-Purpose Room

While having additional space for a playroom or computer room for children is always a plus, virtual schooling makes this room a necessity. A home with an extra room with no designated purpose can allow you to set up a learning space that will enrich your children’s school year. Having enough space for a desk, a big table for projects and crafts, and a comfortable reading area can go a long way toward making your children feel supported in their educational pursuits. Children will also enjoy helping in the design of their own “classroom” and it can make the sometimes daunting task of virtual schooling a little easier for everyone.

2. Get Creative with Your Space

Just because a house doesn’t have a designated multi-purpose room doesn’t mean it should automatically make your “no” list. There are plenty of ways to creatively set up your home to fit your needs right now. A room traditionally used as a dining area can be a great study space for younger kids, allowing you to be close at hand to answer questions while also getting things done around the house.

Opting for a home with bigger bedrooms can allow you to section off part of the room to use as a work space for older, more independent children. A breakfast nook can be transformed into a temporary reading corner. There are no hard and fast rules about how to set up your new home, so think outside the box.

3. Storage Space is Important

If you have kids, you know how quickly their space can turn into an out of control mess. Clutter can make it difficult for anyone to focus, including your little ones. Finding a home with plenty of storage opportunities will help you keep your kids organized and on track. A room with a big closet for bins of supplies or walls big enough for shelving will go a long way in helping you organize their daily learning experience.

4. Block Distractions

Keeping your kids focused on their studies can be easier said than done, especially if a little sister is crying in the next room or an older brother is participating in virtual school (with a different teacher) right beside him. Finding a space big enough to separate your children is important. Even if you cannot have your children in separate rooms, a big room that lends itself to being sectioned off can help your children focus on the task at hand and get the most out of their studies.

Coronavirus has changed the way our daily lives look and we are all adapting the best we can. If you are looking to find a home to better suit your family’s needs, Veitengruber Law can help. We work closely with many New Jersey real estate agents and would be happy to connect you with someone knowledgeable in your area!

 

Why Delaying Bankruptcy is a Bad Idea

Many people facing bankruptcy look at it as a personal failure. Because of this, many individuals that could benefit greatly from filing for bankruptcy avoid it, digging themselves deeper and deeper into financial trouble. There can be a hefty price for waiting to file for bankruptcy (literally). Not only is financial struggle emotionally draining, the impact of long-term financial difficulty can severely damage your ability to bounce back. Here are three reasons why delaying bankruptcy is usually a bad idea:

1. Time in the “Sweatbox” is Draining

The time period immediately before filing for bankruptcy is known as the “sweatbox.” During this time, people experience an overwhelming increase in debt, the inability to pay for basic needs in order to avoid bankruptcy, and a lot of financial stress. Some people stay in the sweatbox for months – or even years! – before finally reconciling their financial issues.

The longer you wait to file for bankruptcy, the more your assets will be depleted, the higher your debt-to-income ratio is likely to climb, and the more likely you are to face debt collection lawsuits. All of this is very stressful which, over a long enough timeline, can cause lasting damage to your mental, emotional, and even physical health.

2. Depleting Assets is Unnecessary and Painful

When debtors view bankruptcy as a last option to be avoided at all costs, they become desperate to improve their financial situation by any means necessary. In order to do this, people will sell their valuables and property in order to pay off some debts. They may also give away possessions out of fear of losing them in a bankruptcy proceeding. It is also common behavior to dip into a valuable 401(k) or IRA to hold off creditors. DON’T DO THIS! Bankruptcy laws offer many exemptions to protect these assets. In many cases, it is possible to keep your house, your car, and your retirement savings intact when filing for bankruptcy.

3. Minor Improvements Can Backfire

Improving your financial situation—but not enough to allow you to return to a reasonable standard of living—can actually cause you to be ineligible for bankruptcy. You might be in a better spot than you were before, but if you still cannot get ahead of your debt and expenses, you may still need to file for bankruptcy.

Debtors who file for bankruptcy must pass a “means test,” which determines your eligibility for different kinds of bankruptcy. So, for instance, if you got a better job with more hours or better pay, you may no longer qualify for Chapter 7 bankruptcy in which you can discharge many of your debts outright. Even if Chapter 13 bankruptcy is the right choice for you, prolonging that decision can result in high monthly payments over a longer period of time to pay back all of your debts.

Remember: bankruptcy is meant to be a second chance for honest debtors down on their luck. Bankruptcy can be your chance to start your financial life over. Veitengruber Law is an experienced bankruptcy law firm in New Jersey. We’ve been working on NJ bankruptcy cases for a decade now, and our experience has taught us how to use bankruptcy as a tool to transform your life for the better. If you are struggling, don’t wait. Contact us today.

Borrowing Money for College Without Your Parents’ Help: Student Loan Info for Students

For many college students, student loans are an inevitability. Scholarships, grants, and work study opportunities can only go so far to cover the major cost of most institutions of higher education. Often, college students take on the responsibility of federal or private student loans without fully realizing what they are signing up for. Before signing on for student debt, here are four things students should think about:

1. Understand Your Budget

When you take out student loans, understand that you will need to pay them off eventually, often with interest attached. So while it might feel like you are flush with cash after the loan hits your account, it is important to save student loan money for necessities in an attempt to spend less than what you have been loaned.

This money is earmarked for books, tuition, food, and transportation expenses. Spending student loan money on excess expenses like eating out and heading to the movies with friends can cause you to waste your financial resources. Plus, the more money from your loan you are able to save, the easier it will be for you to eventually pay off the loan entirely. Prioritizing how you spend your money now will help you be more prepared for your financial future.

2. Only Borrow What You Absolutely Need

The biggest mistake students make is borrowing more than what they actually need and can reasonably expect to be able to repay. Student loan providers are often more than willing to offer a student much more money than they actually need in the hopes that they will spend it and not be able to repay it right away, thus earning the lender a ton of money in interest fees.

You can choose how much of a loan offer you want to accept. If you leave a portion of a loan unclaimed, that amount will be returned to the lender. If you do opt to take the full loan and find that you do not need it all, you can return it to the lender as a payment.
REMEMBER: The more money you accept as a student loan, the higher your monthly payment will be.

3. Your Career Choices Will Be Impacted

Once you graduate and those student loan payments begin, you must quickly find a job with a salary that allows you to make your monthly payments. When bills are coming in monthly, the importance of your happiness at your job means a lot less than the money you are bringing in. This can prove limiting to students who discover they have entered a career path they do not like. Taking on additional student loans in order to change careers isn’t an option for everyone. The more money you borrow in student loans, the less wiggle room you’ll have to pursue different job options when you graduate.

4. Your Loan Balance Can Increase Even With Regular Payments

Even if you make your monthly payments on time and in full, it is possible that your loan balance will still increase over time. This happens mostly with an income driven repayment plan. If your monthly payments are based on your salary instead of the actual debt owed, it is possible that the payments you make will not be enough to cover the interest you accrue every month. THIS IS A HUGE PROBLEM.

If you anticipate entering the workforce in a low-paying field, you will need to take this into account when accepting student loan debt. It is crucial that you are able to pay off debt plus interest with your monthly payments.

Student loan debt can lead to anxiety, fear about finances, and regret. Many students feel weighed down by their student loan debt. If you are overburdened with student loan payments, or don’t know which choices are right for you, Veitengruber Law can help you find a workable solution. Whether you’re a parent or a student who needs guidance, give us a call to set up a Zoom consultation so we can help relieve your fears.

How to Improve Your Credit Score During Difficult Times

It’s easy to stay on top of debt and bills when you have a steady, reliable income. But if you lose your income or take a pay cut due to a recession, it may impact your ability to manage all of your debt. If your situation becomes dire enough and you have to take on more debt to manage your bills or begin to miss payments, your credit score could be drastically impacted.

If you’ve experienced an economic downturn, you know it then becomes more difficult to get approved for new lines of credit. If you are able to maintain or improve upon your credit score, you will have a better chance of getting access to credit when you really need it.

Here are some ways to maintain or even increase your credit during difficult financial times:

1. Check Your Score and Report

At the first sign of economic strife, check your credit score and secure a copy of your credit report. Knowing where you stand will allow you to understand how much work you will need to do to maintain or improve your score. Now is also a good time to closely review your credit report for any mistakes. If you see an error (like a missed or late payment when you paid on time), you can file a dispute directly with the credit bureau you got the report from. Sign up for credit monitoring and get alerted when your report is updated.

2. Pay-off Past Due Debts

Since your payment history accounts for 35% of your overall score, it is important to make payments on time, in full. If you are behind on any payments, it is a good idea to try to catch up as quickly as possible. Set up automatic payments to help you keep track of paying bills on time.

3. Adjust Your Spending and Stick to Your Budget

When the economy takes a dip, it is a good idea to create a budget—even if you don’t anticipate taking a hit on your personal finances. If you already have a budget, negative changes in the economy can signal a good time to review your spending habits and cut back on nonessential expenses.

During a recession, it is a good idea to eliminate nonessential items and reduce as many essential items as possible from your expenses. Try to avoid using credit cards during this time or only charge as much as you can pay off within a month. Keeping your debt to total credit ratio low will help buoy your credit score.

4. Build or Maintain Your Emergency Fund

If you already have an emergency fund, consider putting any extra money you save by more stringent budgeting into that fund. If you don’t have an emergency fund yet, now is a great time to start one. Ideally, you want to have a sizable emergency fund before a recession or economic turn, but it is never too late to start saving for financial curveballs.

You should have three to six months of essential expenses saved up in your emergency fund. If cash is already tight , finding a way to generate any extra income to go towards your emergency fund can save you a great deal of strife down the line if your main source of income does become disrupted. Being able to pay your bills for even one month after you’ve lost your income can help you maintain your credit score until you find other avenues of income.

A recession can add financial stress to any household, but there are some simple steps that can help you stay on track. If you need to improve your credit score and need some guidance, Veitengruber Law can help. Our credit repair services provide customized solutions to increase your credit score and keep you afloat during financially challenging times.

Can Co-Signing a Loan Affect Your Credit Score?

When you co-sign a loan, you have a lot to lose and little to gain. As a co-signer, you are legally responsible for repayment of the entire loan, even if the main borrower stops making payments. It is very important to ONLY co-sign with someone you trust and with whom you have open communication. In the event that the borrower stops making payments, your credit can be damaged. Luckily, Veitengruber Law has had great success helping our clients mitigate the damage caused specifically by co-signing for a borrower who left them holding the bag. The first thing we do is have our clients follow these four steps:

1. Resume Monthly Payments

If it is still possible, resume the monthly payments on the loan. The loan might be for something that does not directly benefit you in any way, but in order to protect your credit, you should make timely payments if possible. Payment history—that is, on time payments made in full—is one of the most important parts of your credit report. If your co-signer misses one or more payments, your credit score can quickly start dropping. To lessen the damage, resume payments ASAP.

2. Pay Off the Loan in Full

If you can afford it, paying off the full amount of the debt owed can actually increase your credit score. The amount of total debt you possess is another huge factor that goes into determining your credit score. The less debt you have, the more your score will increase. You can gain back points you lost for missed payments by eliminating that debt completely.

3. Talk to the Creditor

Credit reporting agencies can only report what your creditors tell them. Ask the loan company if they will work with you to limit the damage to your score. They may report your account as in good standing if you agree to pay off the debt in full, or make a plan to bring the loan current. Many creditors are willing to work with borrowers if it’s probable that they’ll get a return on their investment.

4. Give it Time

If your credit score does take a hit from co-signing for a borrower who did not fulfill his/her end of the deal, the only way to fully repair your score is to give it time. Any missed payments will remain on your credit report for seven years no matter what you do. However, a consistent history of timely payments and low debt levels will help you improve your score as the years go by. During this time, the age of your credit will increase as well, adding more points to your overall score. By the time the incident is off your credit report, it is very possible to have a better score than ever before.

If your credit has been damaged by co-signing, Veitengruber Law can help. We understand how creditors work and can provide individualized solutions to improve your credit. A low credit score can cause a lot of stress and financial anxiety. Even if your credit is absolutely tanked and you can’t possible imagine a solution, call us. We’ve never met a credit score we couldn’t help!

Pandemic Parents Ask: Should I Quit my Job to Homeschool my Kids?

As kids start back to school this month, NJ families are grappling with how to adjust to the changes many school districts are making in response to the pandemic. Parents are trying to balance work with their children’s virtual learning and even when children are attending school in person, adjusted schedules mean it can be difficult to find childcare. As more responsibility for education falls on parents, some are wondering if they should leave the work force in order to care for their children. Are you financially prepared to take this step? Answer the following questions to help you decide.

1. Are You Eligible for Paid Leave?

Taking a leave of absence might buy you the time you need to care for your children while maintaining employment. The Families First Coronavirus Response Act includes provisions allowing parents to take 12 weeks of paid leave to care for a child if their regular child care provider is not available because of the pandemic. Leave can be intermittent or all at once as long as it is before the end of the year. This paid leave only provides two-thirds of your salary and is only applicable to: (1) employees of public entities or private companies with more than 500 employees, (2) employees that have been working for at least 30 days, and (3) employees that are unable to work remotely. If you do not qualify for paid leave under the Families First act, consider talking to your boss to see if they can accommodate your new parenting reality. You may be surprised by their response!

2. Is it Possible for You to Work from Home?

Many Americans are already working from home all or part of the time in order to comply with rules regarding social distancing as the coronavirus pandemic stretches on. Even if you think you wouldn’t be able to effectively do your job from home, it’s still worth checking into. Businesses all over the world have had to change the way work gets done, and right now flexibility is key to success. Be prepared with helpful suggestions when you approach your superior(s) with this request. The easier you make the transition for them, the better your chances are of getting approved for telework.

3. Can You Adjust Your Hours?

If you aren’t eligible for paid leave, it may be possible to change your working hours. Depending on your job, you may be able to shift your work hours to maximize your time at home during school hours. Another viable option may be working opposite hours of your parenting partner, if you have one, allowing you both to focus on your children when they need you.

4. Can Your Family Survive With Less Income?

If you decide that cutting back your hours or leaving the workforce entirely is the right choice for you, think about how this reduced income will affect your family. Determine what your essential expenses are, and compare that number to your family’s lower income with you not working. If you can match the expenses, perfect! If not, you may need to look for alternative, part-time work that you CAN do from home (see #5).

5. Can You Find More Flexible Work?

If you do need to supplement a spouse’s income in the event that you leave your job, it is important to know ahead of time how you will bring in extra money. Virtual learning itself has created the need for online tutoring and mentors. Childcare jobs are also abundant due to daycares and after school programs being canceled. If you have other marketable skills, you can try freelancing. There are many grocery and food delivery services being offered right now that would allow you to work weekends or nights.

Families across NJ are facing new and challenging obstacles this school year. If you are concerned about how to balance your child’s academic success with your financial security, you’re not alone. Under the guidance of the Family First Coronavirus Response Act, you have options to help prevent you from going into debt in order to care for your children.

What Does the Extended Foreclosure Moratorium Mean for You

Originally set to expire at the end of August, the moratorium on foreclosures has been extended through the end of 2020. Fannie Mae and Freddie Mac have extended their forbearance options on single-family mortgages until December 31, 2020. As of April of this year, nearly 3.8 million homeowners were in forbearance. If you are struggling with your mortgage payment right now, it might be time to ask your loan provider about mortgage relief options.

The CARES Act was created to help those impacted by pandemic-related health complications or financial setbacks. Under this act, borrowers are able to ask for a pause on or a reduction of monthly mortgage payments. Forbearance can be taken for up to a year in 6 month increments. If you are a homeowner in forbearance due to issues surrounding COVID-19, your mortgage servicer can even offer to defer missed payments until the home is sold, refinanced, or the loan is paid in full. The additional moratorium on foreclosures applies to over 28 million enterprise-backed mortgages (mortgages backed by Fannie Mae or Freddie Mac).

Prior to June of this year, it was unclear how these missed payments would be paid back after the forbearance period ends. The Federal Housing Finance Agency (FHFA) announced in Summer 2020 that they were working towards an agreement that would allow homeowners to tack on missed payments to the end of their loan. This would extend the life of the loan but save homeowners from having to make a lump sum payment to pay back the payments they missed during forbearance.

It is important to note though, that if you move or refinance you will need to pay back any missed payments at that time. If you are considering moving or refinancing anytime soon, you will want to explore other options with your mortgage servicer. You also need to keep in mind that these missed payments can add up to more than just your monthly mortgage payment amount since the deferred total will include principal, interest, and escrow advances.

Another alternative to paying back the missed payments is to pay a higher monthly bill for a designated period of time until you have caught up. This would still allow you to pay off your mortgage according to the original timeline while repaying missed payments a little bit at a time. If your income reduction or unemployment is likely to be long term, you may be eligible for a permanent mortgage modification. Regardless of the option you choose, always make sure you understand the exact terms of any mortgage relief plan before you agree to it.

If you are interested in finding out more about the forbearance options available to you, contact your mortgage servicer to inquire about their mortgage relief options. Veitengruber Law can help you work with your loan provider to figure out what is available to and appropriate for you. Our goal is to help you stay in your home while exploring ways to minimize your financial difficulties.

Is Now a Good Time to Sell My NJ Rental Property?

Rental properties can be a great investment, providing reliable income, tax benefits, and appreciation on the home over time. But rental properties are also a lot of work and most rental owners eventually sell their properties for one reason or another. Deciding whether to sell now or wait depends a lot on the rental unit itself and your specific circumstances. If you have been considering selling your NJ rental property, here are some tell-tale signs that it is a good time for you to sell.

1. You’re in a Different Life Phase

This is perhaps the most common reason rental owners end up selling their property. If you are getting older and retirement is right around the corner, you may want to be done with the responsibilities of rental property ownership. Retirees may also be looking to cash in on their investment by selling. Likewise, if you are moving out of the area and do not want to worry about long-distance renting, it is probably a good idea to sell.

2. Loss or Big Gain of Value

If the property has frequently gone through a major shift in value, it could be a sign to sell. Market fluctuations are normal, but if your rental has consistently depreciated, it is probably a good idea to sell before it depreciates further. On the other hand, if your property has increased significantly in value, it could be a good idea to cash out now while the going is good. You can use this cash to fund a new investment.

3. The Property or Neighborhood is in Disrepair

As a rental property owner, you expect to put in some time and money investing in the necessary repairs to make your property profitable. But if you are facing several major repairs or renovations, you need to think about how likely you are to see a return on the investment required to make these repairs. If you are younger and just getting into renting, you will likely be able to turn a profit even after spending thousands fixing up the property. But if you are approaching retirement, it might be a better idea to sell instead. On the other hand, no matter where you are in your rental ownership journey, if the neighborhood surrounding the property is going downhill, it is probably a good idea to sell.

4. You Are Having Tenant Troubles

Whether you can’t find good tenants or can’t find tenants at all, this could be a sign it’s time to sell. Some rental owners are well versed in the legal process of dealing with non-paying tenants, but that isn’t the case for everyone. The process of evicting tenants can be stressful, time consuming, and costly. If you cannot find tenants, it could be because the property is in an undesirable neighborhood or the cost to rent is too high. Either way, if you are not receiving money in rent monthly for your property, it can quickly become a money pit.

There are plenty of great reasons to sell a rental property. A rental is an investment—and when that investment is no longer helping you reach your goals, it is time to sell. When the time comes to sell, Veitengruber Law can help. We are experiences in all aspects of real estate law, from real estate sales and lease agreements to representation at closing. Our team is committed to helping you achieve your real estate goals.

How to Write A Mortgage Loan Modification Letter

With many Americans still out of work or struggling due to decreased income, mortgage relief options have allowed some households the respite they need to keep their heads above water. The coronavirus crisis has caused many mortgage companies to offer temporary measures to help borrowers make ends meet during these unprecedented times. These relief programs often include a three month grace period for making mortgage payments during which fees and penalties will not be applied to your account for missed payments. Some lenders are requiring a loan modification letter, while others are automatically approving borrowers who apply online.

If your mortgage company requires a loan modification letter explaining the reasons behind your hardship (income loss or illness due to COVID-19, for example), here are some tips:

1. Keep it Simple

You don’t need to submit a five page essay explaining the intricate details of your finances. Keep your modification letter to one page. Make sure the important details are listed: your income at the time the loan was approved, your income now, the reason for this income/job loss, and how much you expect to be able to pay month to month. Be sure to include your contact information and sign the letter.

2. Include Documentation

Attach income and asset documentation including pay stubs, bank statements, layoff paperwork, and other relevant documents. This will help provide a full picture of your specific situation and prove to the mortgage provider that you are truly experiencing hardship and not just taking advantage of the mortgage relief programs. It will also allow the mortgage provider to get a realistic idea of how much you can afford to pay them every month.

3. Stick to the Facts

Do not try to lie or exaggerate your circumstances. Be honest about what you can afford and what kind of assets you have to help you make your mortgage payments while you work through this financial difficulty. You also do not need to delve too deeply into personal details about your struggles.

4. Be Specific About Your Needs

You need to let your mortgage company know exactly what you are proposing to modify your mortgage. Sit down and determine exactly what you expect to be able to pay towards your mortgage every month. If you still have some income or plan to use savings, state specifically what percent of this income you intend to use towards your mortgage and what that dollar amount is. If you are requesting a full deferment of payments, you need to state that specifically. Approaching your mortgage company with a plan based on the evidence of your financial hardship will make them more likely to approve your modification.

Once you send the letter, be prepared to answer further questions from your mortgage provider, if required. They may require further documentation or offer a different alternative based on their policies and your financial standing.

It might seem intimidating to approach your mortgage company to ask for a modification, but these relief programs are in place for a reason. Many Americans are struggling to make their monthly mortgage payments and mortgage companies are working with homeowners. If you need help drafting a mortgage modification letter, Veitengruber Law can help.