When it comes to short sales many homeowners faced with such a thing generally don’t understand the process nor how it might affect them both in the short-term and the long-term. In an effort to help his clients and prospective clients, Santa Barbara real estate agent Timm Delaney has listed below five facts that he believes everyone should know about short sales.
Fact #1: The first fact that homeowners facing a short sales should know is that their credit rating will drop after a short sale though not as much as it would if the house were to be foreclosed upon. When dealing with a short sale homeowners should expect anywhere from an 80 to 100 point drop on their FICA score. Though this may seem like quite a drop it’s far less damaging than a foreclosure.
Fact #2: The second thing every homeowner needs to know and understand is that lenders may sometimes ask the seller to sign a promissory note for all or part of the forgiven debt as a condition of the short sale. This can be attached to other assets if the note is not paid when it is due and while this occurrence is actually rare it has been known to happen. Remember when it comes to short sales however everything is negotiable.
Fact #3: The third thing every homeowner should remember when facing a short sale is that the chances of getting a mortgage within 12 months of a short sale are very low. However making sure that all of your other bills are paid on time can help improve your chances as well is your credit score and homeowners will be surprised at how quickly their credit score improves when this is done. While you may be losing your home it’s of the utmost important to keep your other financial affairs in order in an effort to make your financial recovery as speedy as possible.
Fact #4: When working with a Santa Barbara real estate agent many homeowners facing a short sale don’t seem to realize that the short sale process itself may take months. There’s no quick workaround for this and no easy way through the process. While some short sales may be quicker than others a homeowner is typically looking at at least 3 to 4 months for the completion of a short sale. An educated Santa Barbara real estate agent will be able to answer all your questions regarding the short sale process and why it takes several months to complete.
Fact #5: There is a mortgage cancellation tax relief act that was passed some time ago which eliminates taxes on forgiven debt on a principal residence through a short sale. This relief was passed in an effort to ease the burden on homeowners dealing with a short sale. While the laws and regulations regarding this acts tend to vary from state to state, in most short sales the same rules and regulations will apply from person to person. When in doubt how this might affect you be sure to speak with a Santa Barbara real estate agent so that you know the facts.
Short sales while designed to save a homeowner from foreclosure and minimize damage to their credit and finances are almost always complicated processes. Working with an experienced Santa Barbara real estate agent who focuses on foreclosures and short sales will make the process seem less stressful, complicated, and can put to rest many of the fears you have regarding short sales. If you or someone you know is facing a short sale or would like to learn more about the process be sure to contact a Santa Barbara real estate agent right away.