San Jose Short Sale
Short Sale is a Real Estate transaction where the home owner sells their home for less money than they owe on the property. For instance, if you have a $1m loan on your property but the value of your home has declined to $800,000; then you sale will results in $200k deficiency judgement that the lender has to write off. And depending on the types of loan (home equity or purchase money loans), you might be liable for the taxes on this 200,000 amount.
That’s why Short Sale do require the approval of ALL the lien or mortgage holders and is different from a regular sale. Short Sale Process will therefore involve proof of Financial Hardship where your broker can help you develop that will document your reasons. Unemployment and under-employment are still the leading cause of Short Sale request despite the economic recovery. Other justification for Short Sale are un-expected and un-foreseen Medical expenses that are preventing your from making your mortgage payments. Finally, forced relocation and job transfer are other justification we have seen used for getting approval of a Short Sale.
The impact of Short Sale on the sellers’ credit is much less sever than a Foreclosure. For starters, when you go through a successful short sale; there is minimal impact on your credit specially since you had no late payments on reported to the credit agencies. In fact, if you participate in a HAFA Short Sale, your loan will be reported a “Paid in Full” according go to latest HAFA guidelines
We do have lenders that will pre-approve owner of a Short Sale Home ONE day after a successful close of a Short Sale Listing!! So, Short Sale of your home does not mean a disaster when it comes to impact on your credit. That is why some owners are using Strategic Short Sales to ride themselves of a bad debt on their home to buy another home with equity. Alternatively, if you home is foreclosed the impact on your credit history will be severe and will last for at least 7 years.
Given the popularity of Short Sales most lenders are now offering homeowners relocation assistance to expedite the the short sale listing, which means they will sometimes pay you to move. Contrast that with the harsh reality of a foreclosure process where you will be given a 2 week notice to move out. Short Sales Listing is a much more humane and elegant way to exist a difficult financial situation while minimizing the damage to your credit history.
Don’t expect that kind of treatment with a foreclosure proceeding. Contact Us if you need help exploring your options for a Short Sale.
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