When people enter into a mortgage agreement, they don’t imagine that they’re going to end up in foreclosure. However, since the economic downturn, it’s something more and more homeowners are facing. When they do, they have many options available to them. A very common one is a short sale, which allows homeowners to sell their homes for less than what is owed on their mortgage. While no one ever wants to be in the position of having to put their home up for a short sale, there are many benefits this option has over foreclosure.
Short Sales are Better for You and the Housing Market
A foreclosure will have a very negative impact on you. First, you will lose your home. Although this will happen in a short sale as well, a foreclosure will also negatively affect your credit much more than a short sale will. However, a foreclosure won’t only hurt you, it will also hurt your local housing market, which can harm the economy as a whole. A 2010 report by the Federal Reserve Bank of Cleveland showed that when a home went into foreclosure, it caused the value of all homes within a 260-foot radius to lose up to one percent of their value.
A Short Sale Could Save You Money
Going through a foreclosure doesn’t only mean that you will lose your home, but it will also cost you a great deal of money. There are a number of costs associated with foreclosure, particularly if the lender obtains a deficiency judgment against you. For many people that have gone through the foreclosure process, these costs are just too much and cause them to file for bankruptcy. When you put your home up for a short sale, however, the new buyer will absorb some of those costs, which will save you money in the end.
Short Sales Help the Lender
If a lender has already started foreclosure proceedings against you, there’s a good chance that you’re not feeling very friendly towards them. As such, you may not care about helping them out. However, you should.
Foreclosures cost lenders a lot of money. There are court costs, the cost of legal filings, hearings, and costs associated with all the documentation that goes into a single foreclosure. That’s not to mention that if your home takes a long time to sell to a new buyer, it will cost them even more. When the lender agrees to put your home up for a short sale though, they can recover some of those costs because there is a new buyer for the property right away. That means there’s a better chance that they won’t try to obtain a deficiency judgment against you, which is good for you and the lender.
Short Sales Give You More Control
Once your lender starts foreclosure proceedings, it’s a difficult process to stop. It will also be extremely stressful and arduous for you. Your mailbox will start to fill up with demand letters and confusing documents and there will be constant exchanges with the lender’s legal team.
During a short sale, there are still many negotiations, meetings, and paperwork you will have to contend with. The short sale process, though, is more similar to a traditional sale rather than a foreclosure process that involves litigation and can place an immense amount of pressure on you.
While these sales can still be stressful, a short sale will still allow you to play a more active role in the process and deal mainly with the bank, the new homebuyer, and the real estate agent. Many homeowners find this process to be much more manageable than being at the mercy of the bank’s attorneys.
Short Sales Make You Less Vulnerable to Scams
It’s hard enough facing foreclosure. Unfortunately, there are also many opportunists that are just waiting to take advantage of stressed and vulnerable homeowners facing foreclosure. These individuals tell homeowners in foreclosure that they can help avoid the process and give homeowners a better chance of keeping their homes. Instead, they are really just trying to gain access to the little money the homeowner has. Too often, when this happens the homeowner comes out of the process owing more than they did before.
Short sales don’t create the same opportunities for fraudsters. Short sales work very similarly to other real estate transactions and homeowners always know that the professional they are dealing with are just that – professionals. This eliminates the possibility of the homeowner falling for a scam and ending up in an even worse position.
Short Sales Are Less Stressful
When going through a real estate transaction, there will be a whirlwind of activity between you and the seller, and this can be very stressful. However, foreclosures are much more stressful. Once a lender forecloses on your home, your credit score will take a major hit, and you’ll be far more stressed from the drawn-out legal process. There is also a stigma attached to foreclosure, which you’ll find quite unnerving.
Short sales are not entirely risk-free when it comes to your credit. They also won’t completely eliminate the financial implications that are associated with being unable to pay for your home. However, a short sale can open the door to other solutions that will allow you to avoid legal action, not to mention the long and laborious foreclosure process.
A Florida Foreclosure Defense Lawyer Can Advise of Your Options
If your lender has started foreclosure proceedings, or you’re behind on your mortgage payments, it’s important you speak to a Fort Lauderdale foreclose defense lawyer as soon as possible. At Loan Lawyers, we will advise you of all your options and help you choose the one that’s right for you. Facing foreclosure is a scary thing, but you don’t have to go through it alone. Call us today at (954) 523-HELP (4357) or contact us online to schedule a free consultation with one of our attorneys.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.