Short Sales

The Short Sale

The term short sale has become very popular in recent years but many people are still not sure exactly what it is. A short sale happens when the bank allows you to sell the home at a price which is less than the amount that you owe on the mortgage(s). What is leftover of the mortgage is many times forgiven by the bank, which means that you can avoid foreclosure on the home and the blemish on your credit report.

Obtaining a short sale is a rather complicated process that requires a lot of patience and persistence. The first step is to ask your lender if you are eligible to short sell. Next you must put the house on the market and attempt to sell it, keeping in mind that closing on a home in a short sale will take longer than a traditional real estate closing. Once an offer is obtained, it is submitted to the lender for review, along with documentation supporting the financial hardship, and the lender considers whether it will approve the offer details (buyers, purchase price, net payoff, etc.). Once an approval is obtained, the closing may take place if it is a cash offer, or, if the new buyer is obtaining financing, the buyer’s lender will then begin to process the new purchase money mortgage.

As mentioned earlier, the short sale process is a rather complicated one, and can be very difficult to proceed on your own. It is highly recommended to seek the help of a qualified short sale attorney to guide you through the process from the very beginning. Seek a free consultation with an attorney before starting the process and seek help in determining if you are qualified for a short sale. If so, the attorney can tell you what to expect from the process and guide you through it step by step.

Florida’s Housing Market Crisis

Florida has one of the highest rates of underwater mortgages, according to a recent report on NBC News. A shocking 44.2%of homes throughout the state have negative equity, meaning that the homeowner owes more on the mortgage than the house is worth on the real estate market. Making matters worse, 17.4%of home mortgages in the state are either in foreclosure or have passed the 90-day past-due mark, giving Florida the highest foreclosure rate in the nation. This is due in large part to the fact that when the housing bubble popped in 2008, home values in this state dropped by more than 40%, leaving thousands of homeowners with properties that are worth far less than what they paid for them and with little or no hope of ever building equity in the future.

Living with an upside-down mortgage can be depressing, to say the least, and many people in this situation feel trapped. Even if you sell the property, you will still owe the bank thousands or tens of thousands of dollars. Worse, you may seem to have no way out of a mortgage that you cannot afford, and a foreclosure may be all but certain. Fortunately, you might be able to find a solution by contacting a Jacksonville foreclosure defense lawyer from The Law Offices of Justin McMurray, P.A. for help with pursuing a short sale of your property.

Jacksonville Short Sale Attorney, Foreclosure Defense

An attorney from our team may be able to help you get the bank’s approval for a short sale, which involves selling the property at the highest possible price despite the fact that the sale proceeds will not be enough to pay off the remainder of your loan. One of the most crucial aspects of short sale negotiation is getting the lender to sign a waiver of deficiency, an agreement which releases you from the liability to pay the difference between the loan balance and the sale price. With success, you can get rid of a toxic asset and move on in life.

Credit Effects of Short Sale

It is important to note that a short sale will have a negative impact on your credit score. This is because a bank will almost never consider a request for a short sale until the borrower has defaulted on the mortgage, so you will most likely have to skip at least one payment, and this will go on your credit report. You will not, however, have a foreclosure on your report, and a short sale is normally less damaging to a credit score than a foreclosure. Contact us now for a free case evaluation to learn whether this is an option for you and to take the first steps.

How Does a Short Sale Compare to a Foreclosure in Credit Score Affect?

A short sale can have a lesser affect on credit score in some situations, but it can also have an equal affect on credit score as foreclosure. If you perform a short sale after being 90 days or more delinquent and do not have the deficiency forgiven then the affect on your credit score will be about the same as if you were to have gone through foreclosure. If you are able to get the deficiency forgiven, or you can get a short sale approved without being late on your payments, than a short sale will typically not result in as large of a credit score hit. Each case is unique and the affect on credit score will be different for every person.

The biggest difference in how a short sale and a foreclosure affect your credit score is the time in which it takes for you to be able to purchase your next home following the event. Many people that perform a short sale can receive respectable terms on a home loan within 2 or 3 years of performing a short sale, while it can take anywhere between 7 and 10 years to get those same kind of terms following a foreclosure. This is a huge difference for anyone that wants to own a home in the future and needs to be taken into consideration when faced with the decision.

Understanding all of the positive and negative effects that a short sale and a foreclosure can have on your financial future is important, which is why it is a good idea to meet with a short sale attorney in Jacksonville to discuss your options. Call today to schedule your free consultation with a short sale attorney.