Short sales aren’t simple, but with proper guidance they offer an alternative to foreclosure that provides significant benefits. There is a lot of misinformation out there regarding short sales, and today we are going to correct five of them.
1) Banks want to avoid short sales
Short sales are generally a good deal for banks compared to foreclosures. A short sale is usually much less expensive for banks as well as being easier. Some banks have actually started to streamline the procedure to make it easier for the seller.
2) Short sales always get denied
A correctly submitted short sale request is often accepted. If you have an agent and a lawyer who are familiar with the process, there’s a good chance that the short sale will be approved. Short sales require specialized knowledge, and experienced assistance will make your chances of success much better.
3) It’s possible to have a short sale approved any time you get behind on your payments
If the lender has already moved into foreclosure proceedings, it will be less inclined to approve a short sale. All things being equal, it’s much better to start the short sale procedure early.
4) You can’t file for a short sale if you’ve already received a foreclosure notice
It’s true that after a bank has spent a lot of money on a foreclosure, it’s less likely to look favorably on a short sale. If you’ve received a foreclosure notice but you’re interested in a short sale, you should contact an expert realtor and lawyer as soon as possible. The longer you wait, the less likely it is that the short sale will be approved.
Another common misconception is that having had a loan modification denied means a short sale will also be denied. These procedures are unrelated and handled by different departments. Don’t let denial of a loan modification discourage you. There’s no reason to believe it makes short sale approval less likely.
5) If you go through a short sale, you can’t buy another house for a long time.
This is often not the case! Your credit will take a hit, though it won’t be a severe as if your house was foreclosed on. Exactly how long you have to wait depends on the details of your credit history. Taking FHA loans as an example, you can apply for a loan right away if you weren’t in default at the time of the short sale and if you’d been making all installment debt payments on time for at least 12 months before the short sale. If you were in default on your mortgage, then you need to wait for at least three years to apply for an FHA loan. You may not have to wait three years if you can demonstrate that extenuating circumstances caused you to default.
Please contact us today to learn more!
Law Office of Ray Garcia, P.A.
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