Doing A Short Sale Will Not Hurt Your Credit
Tim Mackey is a Scottsdale-based lawyer who handles all types of bankruptcy and short sale filings for clients at the Mackey Law Firm PC
. According to Mackey, short sales can be excellent opportunities for struggling homeowners to sell their homes and be released of their debts. While many people overlook these opportunities out of fear or harming their credit scores, the good news is that this fear is often unfounded.
In general, selling a home via a short sale will not hurt a homeowners credit score, and certainly the process will not be as damaging as a foreclosure would be. For many families, the choice between continually struggling to make ends meet or trying to sell their homes seems easy. Due to universal drops in home prices, however, selling a home for the amount that is still owed on a mortgage is not necessarily an option for every struggling homeowner. For people in situations like thesewhere the home itself may no longer be worth the amount owed on a mortgagea short sale is almost always going to be a better choice than going through foreclosure or continuing to pay for a property that one cannot afford.
Benefits of Doing a Short Sale
For many homeowners in this situation, one common concern is how to find another place to live in if there is a significant drop in their credit scores. With more and more rental companies looking into FICO scores before leasing to new tenants, this is a valid concern. Luckily, homeowners in Scottsdale who work with lawyers on their short sales can be confident that their credit scores will not be damaged to the point where they wont be able to find new places to live.
In fact, depending on the bank that a homeowner is working with, he or she could be eligible to buy another new house in a matter of just two or three years. That is a major benefit for the homeowner who can oftentimes qualify to buy a new home just two years after going through a short sell, because homeowners who go into a foreclosure typically have to wait a full four to five years before their credit scores are high enough to get a mortgage.
While filing for bankruptcywhich is another option for homeowners who cannot afford their mortgage paymentswill damage a persons credit score, it isnt as bad as foreclosure either. Homeowners who file for bankruptcy can usually get another mortgage on a house an average of two years after their initial bankruptcy filing. For people whose banks are willing to work with them on short sales, going through the process is almost always the better choice when comparing a short sale to a foreclosure or a bankruptcy.
Why a Short Sale Might Not Work
Although a short sale might be the most favorable option for those who are unable to pay their mortgages, unfortunately, the process sales can sometimes fall through. While successfully selling a home through this process is generally better on ones credit than other options, there are a number of reasons why a homeowner might not be successful in his ability to short sale a home.
First, if there are no interested buyers, a short sale might not work. Even if there are interested buyers in the market, that doesnt necessarily guarantee that the deal will go through. The lending banks willingness to accept the deal is imperative in a short sale case, since it is the bank that ultimately has the power to decide whether to accept the offer from the new buyer and discharge the current homeowner of the debt he or she still owes on the house.
Secondly, problems with short sales can sometimes come up when the seller starts the short sale process too late in the game. Banks are less likely to work with a homeowner who only becomes interested in trying to short sell a home late in the process.
Lastly, a short sale might not go through if the person selling the home is trying to do it himself without the help of a short sale lawyer. In fact, a lot of our clients have tried to do short sales themselves, and they end up coming to us after they have failed.
Of course, for many families, deciding whether or not to go through a short sale can be a difficult choice. And there is no single solution that works for everyone. But for those who have excessive amounts of debts on their homesand whose banks have agreed to work with them and release them of their deficienciesa short sale can be an excellent option to release the burden of debt without necessarily ruining their credit scores.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
by: Tim Mackey
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