
The path to selling a home is rarely straight; it twists and turns with the unpredictableness of the financial markets and personal circumstances. For many homeowners, short sales are seen through the lens of distress and are often neglected due to their negative connotations. However, even the negatives are frequently outweighed by the many opportunities for financial recovery, a fresh start, and even the preservation of creditworthiness. Before jumping into a short sale to help with your financial hardship, we are here to help define a short sale, showcase the benefits, and teach you how to recover.
Understanding Short Sales
A short sale occurs when a homeowner is in dire financial trouble and needs to sell their property for less than the full amount owed. When this happens, the property is said to have been “sold short.” The lender of the original mortgage gets all of the proceeds of the sale and either forgives the difference or gets a deficiency judgment, which requires the original borrower to pay what’s left over. Typically, we at Bradford Miller Law are able to get the lender to forgive the deficiency. With this in mind, how do you determine if a short sale is the right move for you? Several situations make a short sale a good option: a decrease in property value below the mortgage amount, financial hardship, like loss of income or major illness, or mortgage terms that will skyrocket or have become unmanageable.
Financial and Home Equity Redemption
One primary benefit of a short sale is restoring financial peace. By proactively engaging in this process, homeowners can free themselves from the burden of unmanageable debt and protect their equity. It’s a strong damage control tool that allows you to save your remaining assets and avoid the fallout associated with foreclosure. A successful short sale effectively alleviates your debt. This means that the lender surrenders the claim to recover the remaining balance with a clear financial horizon, free from the weight of debt.
Recover Your Credit Score
The silver lining is that it can lend itself to advancing your credit. Defaults on loans, like those that come with foreclosures or bankruptcies, lead to the scarlet letter of poor credit. However, A short sale offers a less marked effect on credit scores, especially compared to the devastating marks of foreclosure. By selling the property and negotiating a solid case with the lender, the short sale process is a proactive approach to financial resolution that credit agencies recognize. This progressive move can mitigate the long-term impact on your credit and potentially allow for faster credit score recovery.
Possibility of Re-Homeownership After Short Sale
Short sales are about building a fresh start. The freedom of reliving an unmanageable mortgage goes beyond financial freedom and extends to mental and emotional freedom. This freedom reinforces your opportunity to start fresh with a secure financial foundation. Government and private sector programs often provide paths back to home ownership post-short sale. Individuals previously involved in a short sale can leverage these programs to make proud, supported reentries into the housing market.
Post Short Sale Financial Recovery
The short sale is just one step in a homeowner’s financial recovery. To fully unlock the silver lining, you must take proactive steps toward rebuilding your credit and creating a stable financial future. After a short sale, it’s time to reassess your priorities and set up a realistic budget. It’s essential to save for emergencies and future down payments. You’ll also need to work diligently to repair your credit. Ways to do this include paying bills on time, keeping credit card balances low, and using credit responsibly. Homeownership assistance programs can help you become a homeowner again after a short sale. They often require a waiting period and may have specific eligibility criteria to determine what you qualify for.
Find The Solution
A short sale may seem like the end of a chapter, but it can often bring new opportunities. Understanding the process and taking proactive steps post-sale can turn a challenging situation into a step toward a secure future. Remember, you’re not alone in this; contact us if you are considering a short sale. We’d be happy to guide you in your financial recovery.