What is a short sale and how does it benefit you here in New Jersey?
If you are thinking that question about yourself… great question!
In this article, we will dive into that question so you as a New Jersey home owner can tell what your options are during foreclosure or just if your home mortgage is underwater.
A short sale can be a smart way to mitigate foreclosure (here is a great definition of what a foreclosure is in case you are not sure) on a mortgage, although they can 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 really common in the market a couple of years back when the flood of foreclosures hit the New Jersey market… but as foreclosures have slowed down and home values have climbed back up a bit… lenders 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!).
Here are a few reasons you may want to consider a short sale on your New Jersey home
You Avoid Foreclosure And The Harmful Effects Of It
The primary and most crucial benefit of a short sale is that you avoid a foreclosure on your home. Your mortgage lender accepts less than what is owed on your mortgage, leaving you without the debt that you cannot afford, providing a lifeline.
Foreclosure, on the other hand, can lead to all kinds of financial problems, starting with the inability to obtain a new loan for a home because a foreclosure stays on your credit record usually for up to 7 years. This hindrance can substantially delay your plans to re-enter the housing market, causing prolonged financial instability.
Moreover, the ramifications of foreclosure extend beyond homebuying. Even renting will become more difficult as your credit score would be affected, and you often have to disclose a foreclosure on a rental application. This added layer of difficulty can hinder your ability to secure housing even in the rental market.
The protracted nature of foreclosures compounds the challenges, forcing individuals to endure years of financial uncertainty before they can qualify for a new mortgage. In contrast, a short sale provides a more expedient and proactive solution, allowing homeowners to sidestep the detrimental effects of foreclosure and move toward financial recovery more swiftly. By choosing a short sale, individuals not only escape the burden of foreclosure but also pave the way for a more promising and accelerated financial future.
When grappling with the prospect of foreclosure, the repercussions extend far beyond the confines of housing. With a foreclosure, you face all kinds of ramifications with your credit. Buying a car and renting a house may be impossible through the normal bank loan routes.
In some cases, the ramifications of a foreclosure can even extend to your professional life. 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 would not 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, without the protracted legal proceedings associated with foreclosure. A short sale is also easier on your credit score, which can allow a homeowner the ability to recover over time. Your credit report will only show a pre-foreclosure status, which reduces your credit rating minimally compared to a foreclosure. Choosing a short sale over a foreclosure not only eases immediate financial burdens but also positions individuals for a more resilient credit profile in the long run.
Buying a New House
One significant advantage of engaging in a short sale is the potential for a quicker rebound in terms of purchasing a new home. A foreclosure can last for a long time, making it 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.
Again, it is crucial to note that this all depends on the actual bank/lender you are working with… so if they are giving you a hard time a year or two after a short sale… shop around and find another bank to work with, who may be more accommodating to your circumstances.
Usually, No Fees Involved
One potential benefit of the short sale is there are usually no fees associated with the process from the bank. In many instances, the banks are motivated to expedite a short sale just because they want to get the note 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 are at risk of walking away from the house… the bank may rather work out the cost-effective route of a short sale over the more expensive foreclosure process.
In contrast, opting for foreclosure may expose you to additional fees imposed by your mortgage lender, exacerbating the overall financial strain. These supplementary charges only serve to compound the damage and prolong the recovery process.
It is worth noting that while the short sale process with the bank typically involves minimal or no direct fees, individuals should be vigilant about potential fees imposed by real estate consultants. 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 to help you with this.
Our company, Beacon Realty Investments may be able to guide you in the right direction on how to give yourself the best shot at a bank approving a short sale with your New Jersey area house… so connect with us by calling 609-531-4990 or shoot 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 who has experience dealing with this type of law.
If you do not know who to contact or where to turn to see if a short sale may be a good option for you… get a hold of us.
We would not charge a thing to discuss your situation with you and let you know your options.
And we can even give you guidance and pointers at absolutely no cost or obligation.
Sometimes we are actually able to do the work for you or even buy the house from you to get you out from under that mortgage… so that may be a viable option for you.
We buy New Jersey houses and we work with home sellers like yourself who are having trouble getting out of your house the traditional way… or who cannot (or do not want to) go the usual route of listing with an agent.
Get a hold of us anytime to discuss your situation. We are here for you!
Or, if you want to see what we can offer on your house… click the link below and fill out the form on the next page. We will make a no-obligation cash offer to you within 24 hours. At least that way you know whether that is an option for you or not.