· Short Sale Attorney in California
· Foreclosure Attorney in California
· DUI Attorney in California
· Bankruptcy Attorney in California
It’s no surprise that homes in foreclosure or heading towards foreclosure are on the rise. Many Americans today are faced with the painful reality that they can no longer afford to pay their mortgage. Not only does this mean the homeowners lose their home, it also has a significant impact on their credit score, which could drop 20-300 points. But if a homeowner can’t pay the mortgage, what other alternative do they have?
Selling a home thru a short sale could be the only solution to avoid foreclosure yet, what exactly is a short sale? What ramifications does it have? Is it really a better alternative than foreclosure?
A short sale is the sale of a home that will be going into foreclosure and is sold for less than the balance owed by the homeowner. The lender (which is usually a bank) may sometimes forgive the remaining balance, but not in every case. Not all homes qualify for a short sale either. To qualify you must submit a letter of hardship why the seller can no longer pay the mortgage. Hardships can include:
· Divorce
· Unemployment
· Death
· Bankruptcy
· Sudden Illness/Medical Emergency
Things that do not qualify for hardship are pregnancy (need a larger home), not happy with neighbors or a bad buying decision. If the seller had assets (money in the bank, stock, IRA accounts, 401K or additional real estate) they would not qualify either.
If a homeowner does qualify for a short sale, this does not mean they are free and clear of their mortgage responsibility. The lender must approve the buyer’s offer before the deal is settled. Even if the seller accepts the offer, it doesn’t mean the lender will. If there is no offer made on the home, then the homeowner would not qualify. It is dependant on a buyer willing to pay the short sale offer. No offer, no short sale.
What about the ramifications of a short sale? Is it really worse than a foreclosure? Yes and no. Your credit will be affected by a short sale. It is reported to all the major credit agencies and does show up on your credit history. Your credit score may not drop as much as a foreclosure, but when a company looks over your credit report, there is no distinction between a short sale pre-foreclosure and a true foreclosure. It’s listed as the same and creditors don’t see the difference – which effects their decision to authorize future credit.
So is a short sale a better deal than a foreclosure? Some think it is. However, each situation is different. A real estate agent can’t give homeowners the expert advice they need to make their decision. Consult with a real estate lawyer that is qualified to give all the facts of a short sale verses a foreclosure. Seeking legal counsel before making any decision is worth the time and effort – especially when there is so much at stake.
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When you need an excellent attorney in California, contact:
McFarlin & Geurts LLP
4 Park Plaza
Suite 1025
Irvine , CA 92614
(949) 206-0400