Is a Short Sale the Answer?

What is a Short Sale? A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. Short Sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender. The benefits of short selling over foreclosure are obvious. A foreclosure puts a long-lasting black mark on your credit history and the process can be long and costly. Short selling can be much faster and less expensive, and it doesn't leave a black mark on your credit like a foreclosure.

How Can We Sell Our Home For Less Than We Owe? If you've taken out a large mortgage to pay off bills or do home improvements, have an 80/20 Combo loan, or one of those toxic teaser rate loans- you may find it hard to refinance or sell your home because you owe more than your home is worth. You may also find yourself unable to keep up with your mortgage payments because of a recent layoff, divorce or illness. As a result more and more people are finding they can only sell their homes for less than they owe on their mortgages. At Upsidedownflorida, we work with your lender(s) to accept a short sale so you can avoid foreclosure and minimize credit damage.

For all the homeowners who are upside down and can no longer make their mortgage payment (because of either a job loss, divorce, or an option ARM that’s resetting higher), up to now the only option was, well, letting the bank foreclose and walking away. That’s not a good option since a foreclosure sticks on your credit record for at least 10 years and becomes public record available to everyone including future employers.

If you find selling your house for less than you owe on the mortgage is an option, you'll want to find a real estate agent who understands your situation. At UpsideDownFlorida, we work with a network of agents that have experience with short sales. Typically our realtors will take a much lower commission on short sales. Our agents sympathize with financial problems brought on by unexpected circumstances, and do whatever they can to help solve your mortgage problems. If you are currently working with a realtor or have one in mind we can work closely with them too.

How Do You Get My Lender(s) to Approve the Short Sale? Your bank will have to be convinced that you deserve to be approved for a short sale. At UpsideDownFlorida, we work directly with your lender to expedite the process and get results. Our team has over 40 years worth of combined experience servicing our clients. We work frequently with all of the top servicers, lenders and banks and leverage these relationships to solve your mortgage problems.

While this may seem obvious, now is not the time to rack up the purchase of luxury items, like fancy cars or jewelry. Your lender will see these debts on your credit report and become convinced you're a loose spender who doesn't deserve a break. It may also be necessary to provide the lender documentation of your financial hardship, such as paystubs, bank statements and so forth. While this may seem like an invasion of your privacy, try to think of it as the fastest way out of an otherwise overwhelming debt. Short Sales can take longer to close than more conventional sales, so plan accordingly. At UpsideDownFlorida however, we do our best to make the process fast and easy. If it works, you've avoided foreclosure and an ugly mark on your credit report. If it doesn't work, you'll know that you've done everything you could to avoid foreclosure and/or bankruptcy.

Will A Loan Short Sale Affect My Credit? A short sale minimizes the damage to your credit that would be caused be a foreclosure. Typically, borrowers see a 50-100 point reduction in their FICO score following a short sale. This, however, is significantly less than a foreclosure which typically results in a judgment and remains on your credit for 10 years and a FICO score reduction of over 300 points. Please note that any reduction in credit score as a result of a short sale can also be impacted by your payment history on other accounts and other mortgages. Thus, borrowers with no other delinquent accounts see less of an impact on their score than borrowers with multiple delinquencies on their accounts.

What Are The Advantages Of A Short Sale Over A Foreclosure? There is far less damage to your credit for starters. A foreclosure is one of the most damaging things that can happen to your credit. A short sale will drop your credit score, but not nearly as much (350 points is the average credit score loss for a foreclosure). A short sale will release you from all further obligations under the mortgage as well. If your property were to go to foreclosure, the lender is able to get what is called a deficiency judgment against you. In this case after the foreclosure the lender can come after you for this Old debt. This amount can be thousands of dollars depending on the size of your mortgage and their loss.