What is a short sale exactly and how does it benefit you here in Reston?
If you’ve run into difficult times and you are asking yourself these questions you’ve come to the right place.
In this article we’ll dive into those questions so you as a Reston Virginia home owner are able to understand your options are during foreclosure or financial hardship and get some relief! Time is the biggest factor in these difficult situations. Most home owners wait far too long to start taking action. Your best recourse is to understand all of your options right away and determine your course of action.
What is a Short Sale and How Does it Benefit You?
A short sale is a sales strategy used to mitigate foreclosure (here’s a great definition of what a foreclosure is in case you’re not sure) on a mortgage. Although they can be difficult to attain in today’s market due to the great deal of appreciate that has occurred over the last few years, they often prove to be a simpler way to resolve any debt left over from a loan if your house is worth less than the amount you owe on the mortgage. This is known as ‘being underwater’ on your mortgage.
Short sales were extremely common in the market after the crash in 2008 when the flood of foreclosures hit the Reston market… but as foreclosures have significantly slowed and home values have climbed back up since then lenders are much less likely to offer a short sale as an option as they used to be (but that is not to say it isn’t an option!).
Here are a few reasons you may want to consider short sale on your Reston home
You Avoid Foreclosure And The Harmful Effects Of It
The main benefit of short sale is that you avoid a foreclosure on your home. A foreclosure is the penultimate harmful ding on your credit. You want to avoid this at all costs. We will discuss the reasons for this further down the article. In a short sale, your mortgage lender accepts less for the property as a settlement than what is owed on your mortgage, leaving you free from any remaining debt that you likely cannot afford.
As we mentioned, a foreclosure is a giant stain on your financial record. The biggest ramification of a foreclosure is starting with the inability to obtain a new loan for a home for up to 7 years because a foreclosure stays on your permanent credit record for that long of a time.
Obtaining a lease for a home or a car purchase will become significantly more difficult as your credit score would be adversely affected and you often have to disclose a foreclosure on a rental or lease application. Foreclosures stay on your credit report for a long time (up to 7 years as mentioned above), requiring you to wait years to qualify for a new mortgage or lease.
Credit Worthiness
With a foreclosure, you will face significant ramifications on your credit score. Buying a car and renting a house may be nearly impossible through traditional bank loan routes as we’ve stated. Applying for anything that requires a credit check will be nearly impossible.
A foreclosure can also effect your ability to get or retain employment. For example, if you are currently at a job where you work or manage money, you could even face termination if your employer puts a lot of stock in that kind of thing (most employers won’t but it has been done before). Most employers run a credit and background check prior to employment as well and if they see a recent foreclosure that may effect their opinion of your ability to manage yourself and your finances responsibly.
By working with the bank to short sale a property you effectively relieve the debt that is left over from what is owed on the mortgage, letting both parties move on. A short sale is easier on your credit score, which can allow a homeowner the ability to recover more quickly in the long run. Your credit report may only show a pre-foreclosure status or nothing at all if you have not missed payments, which effects your credit rating minimally compared to a foreclosure.
Buying a New House
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, this is very dependent on the bank / lender you’re working with so it is worth while to shop around and find another bank if you are running into issues.
Usually No Fees Involved
Another potential benefit of the short sale versus a foreclosure is there are usually no fees associated with the process from the bank. The banks interest lies in getting the note off of their books and if you can prove that your house is “underwater” (you owe more than your house is worth) and you’re at the risk of walking away from the house or being foreclosed on, the bank may rather work out a short sale instead of going through the process of foreclosing. Most people don’t realize that the last thing a bank wants to do is foreclose on a property. It is very costly and time consuming for them and often they walk away with much less money regardless.
In a foreclosure situation, your mortgage lender may tack on extra fees for attorneys and interest that only make the damage worse.
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 in helping you with this.
Our company, Sell Simpli 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 Reston area house… so connect with us by calling 703-544-7516 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 often called a ‘hardship letter’. This can be difficult and is best resolved by finding a good real estate attorney in your area that has experience dealing in this type of law.
If you don’t 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 will give you a FREE no obligation consultation to discuss your situation with you and let you know your options.
Sometimes, with your permission, we’re able to contact the banks directly on your behalf and 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 Reston houses and we work with home sellers like yourself who are having troubles getting out of your house the traditional way… or who can’t (or don’t want to) go the usual route of listing with an agent.
Get a hold of us anytime to discuss your situation. We’re 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’ll 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.