Property values are just about as low as they can be right now. Because of this, more and more homeowners owe more on their mortgage than what their home is actually worth.
This has made it almost impossible for those who have undergone a hardship – like a job loss, divorce, or medical emergency – to keep up with their mortgage payments.
Even those whose job status and income are in good standing wouldn’t be able to sell their home normally and satisfy their debt.
That’s why short sales have become so common. It’s the best possible option for homeowners who can’t modify their loan and need to get out from under a costly mortgage. Here are a few reasons why a short sale often makes the most sense:
Avoid foreclosure
The last thing any homeowner wants is a foreclosure. It’s a long, painful, and public process that can do significant and lasting damage to a borrower’s credit. A short sale, if a loan modification isn’t possible, is the next best way to avoid a foreclosure before it even begins.
Sell your home on your own terms
In a short sale, you’re in control. You can list your home and try to find a buyer. Then, if the lender approves the purchase price, you continue with the sale process like you normally would. You’ll get to meet the buyer, you’ll know exactly what your home sold for, and you’ll be able to determine the timing of your next move. In a foreclosure, you’re at the mercy of the lender. They’ll decide when you have to move out, they’ll have the power to evict you, and they’ll put your home up for public auction.
Pay nothing, receive incentives
The seller owes nothing when doing a short sale. The lender will cover all the costs, including agent commissions and sometimes even attorney fees, if they become necessary. Plus, they’ll almost always provide the seller with relocation assistance. This will usually be in the amount of about $3,000, but can even be up to $10,000 depending on the circumstance.
Salvage your credit
Your credit will still take a hit, mostly because of missed mortgage payments leading up to the sale (most lenders won’t approve a short sale if the borrower is up-to-date on the loan). But once the sale goes through, you can begin to rebuild your credit immediately. This will allow you to…
Buy again in two years
If you maintain good credit following a short sale and can build your score back up to the mid-600s or so, several loan programs will allow you to apply for another mortgage within two or three years. If you go to foreclosure, your score will be much harder to repair and it will take several more years before most creditors will be willing to lend to you again.
The Next Step
Homeowners who owe more than what their property is worth and can’t modify their loan must consider a short sale. Foreclosure is simply not an option and a short sale presents the best alternative.
For a free and completely confidential consultation, call Patriot (617 513-3016) today to discuss your options.
Patriot will be hosting a seminar on short sales at 6:30 p.m. on Tuesday, Novemeber 8th! If you’d like to learn more about the process or try to figure out if a short sale is right for you, we encourage you to come by! Click here to let us know if you can make it.
