What is a short sale and how does it benefit you here in San Diego?
If you’ve wondering about that yourself, then today’s post is for you.
In today’s article we’ll get right into that question so you as a San Diego CA home owner can understand what your options are to avoid foreclosure or just if your home mortgage is upside down or ‘underwater’.
What is a Short Sale and How Does it Benefit You?
A short sale can be a smart way to stop foreclosure (here’s a great definition of what a foreclosure is in case you’re not sure) on your mortgage, although they can sometimes be difficult to attain in today’s market. They often prove to be a simpler way to resolve any debt left over from a loan.
Short sales were quite common in the market a few years back when the flood of foreclosures hit the San Diego market… but as foreclosures have slowed down considerably and home values have continued to climb back up, banks are a little less likely to offer a short sale as an option as they used to be (but they are still doing a lot of them!). However, don’t let this dismay you – the banks just want to mitigate their own losses. If you make a great case, then odds can still be well in your favor. 🙂
Here are a few reasons you may want to consider a short sale for your San Diego CA home
You Avoid Foreclosure And The Harmful Effects
The best benefit of short sale is that you avoid a foreclosure on your home. That is the #1 benefit, hands down. In a short sale, your mortgage lender accepts less than what is owed on your mortgage, leaving you without the debt that you cannot afford. They take a ‘short’ position on the debt owed them, hence the name.
Foreclosure can lead to a ton of financial problems, beginning with the difficulty or outright inability to get a new loan for a home because a foreclosure stays on your credit record usually for up to 7 years. Yikes.
Even renting a home will become more difficult as your credit score could tank due to a foreclosure, and you often have to disclose a foreclosure on a rental application. Foreclosures can also last a long time (up to 7 years as mentioned above), making you wait years to even qualify for a new mortgage.
With a foreclosure, you face all kinds of fallout with your credit. Buying a car and renting a house may be impossible through the normal bank loan routes.
If you work with money at your job you could even face termination if your employer puts a lot of stock in that kind of thing (most employers won’t but it has been done before).
A short sale relieves the debt that is left over from what is owed on the mortgage, letting both the bank and the seller move on. A short sale is also easier on your credit score, which can allow a homeowner the ability to recover in the long run. Your credit report will only show a pre-foreclosure status, which reduces your credit rating minimally compared to a foreclosure. With a short sale, you are technically not being foreclosed on — that says a lot in your favor.
Buying a New House
A foreclosure can last for a long time on your history, making it almost impossible to purchase a mortgage again for up to 7 years.
Short sales offer a little more flexibility for the seller, allowing new home applications only 2 years after the filing depending on the bank. It also makes a mortgage lender more likely to approve your loan than if you had a full foreclosure, getting you back into a home faster. It shows that you took action, that you at least took responsibility to work out a mutually beneficial resolution – that speaks volumes.
Again, this all depends on the actual bank or lender you’re working with, of course … so if they’re giving you a hard time a year or two after a short sale… shop around and find another bank to work with. Don’t just accept the first answer you get.
Usually No Fees Involved
One potential benefit of the short sale is there are usually no fees from the bank – they’re normally just happy to move on. The banks just want to get the note and debt off of their books… and if it can be proven that your house is “underwater” (you owe more than your house is worth) and you’re at the risk of walking away from the house then the bank may rather work out a short sale instead of going through a costly foreclosure. It costs them more than you know in legal fees – they’d prefer to avoid that cost.
With a foreclosure, your mortgage lender may tack on extra fees that only make the damage worse. A short sale helps reduce those fees.
Some real estate consultants may charge a fee for helping facilitate the foreclosure with your bank… so check with them before you enlist a real estate agent or firm in helping you with this.
Our company, Mercury Home Buyers may be able to guide you in the right direction on how to give yourself the best chance at your bank approving your short sale with your San Diego area house… so connect with us by calling (619) 327-9702 or send us an email to us through our contact page here.
Getting a Short Sale – What You May Need To Provide
You will have to provide the bank with proof of being unable to pay your mortgage payments. This can be difficult and is best resolved by finding a good real estate attorney in your area that has experience dealing in this type of law.
If you don’t know who to contact or where to turn to see if a short sale may be a good option for you, then definitely get a hold of us. We’re here to help – today.
We won’t charge you a penny to speak with you about your situation with you and let you know your options. It’s FREE.
We’ll give you our pointers at absolutely no cost or obligation.
Sometimes we’re actually able to do the work for you or even buy your house from you to get you out from under that oppressive mortgage — this may be a great option for you.
We buy San Diego houses and we work with home sellers just like yourself who are having trouble getting out of your house the traditional way or who can’t (or don’t want to) go the usual route of listing with an agent.
Get a hold of us anytime to discuss your situation. We’re here for you!
Or, if you want to see what we can offer on your house, then click the link below and fill out the form on the next page. We’ll make a no-obligation cash offer to you within 48 hours. At least that way you know whether that is an option for you or not.