Tough economic times have placed many people in situations where living expenses are higher than income, especially for those who find themselves unemployed or underemployed. Here in Las Vegas the drop in the real estate market values placed many homeowners in a situation with a mortgage debt higher than their homes would bring should they find a buyer. Most people don't know how to make a short sale because they weren't expecting ever to be in this predicament. In many cases, foreclosure may seem to be their only option, but it is unwise for them to assume that until they know all the facts.
What Are Short Sale Benefits
Even though a short sale does not look great on your credit score, it is still better than a foreclosure. While both stay on your credit record for 7 years, the short sale may be shown as "sold for less than market value," which will cause a drop in points but not as drastically as the foreclosure. Some other factors that make the short sale better are:
- You don't have the stigma of foreclosure on your record, which has a direct bearing on your ability to borrow in the future.
- The bank does not have control of the sale of your home; you do.
- The sale of your home will be no different than if you were selling for a profit.
- A short sale does not require you to be behind on payments.
Purchasing a Home After a Short Sale
Obviously, you probably have some plan to own a home again when you are involved with a short sale. Depending on your payment history and whether the bank requires you to pay any costs that are not covered by the sale, you may be able to get financing for the purchase of a home immediately after your current home is sold.
Generally if the lender agrees to the short sale, the homeowner is not asked to pay any remaining funds on the mortgage. If there is a substantial difference in the amount that remains due on the mortgage and what the sale amount of the property is, the short sale may not be an option. Still, it is best to know that for certain.
If you are in arrears with payments, getting financing for another less expensive home may not be an option for two to three years. Even if your payments are current at the time of a short sale, it can still be difficult to find financing for another home.
A new FHA home loan might require you to move at least 600 miles away from your last address. Whatever the case with a short sale, your chances of securing a loan are much better than if you go through foreclosure, which will keep you from getting a loan for 7 years. In any event, you owe it to yourself to speak with a real estate agent to find out what your best option might be. A Las Vegas short sale is generally better than the foreclosure alternative.