At De Novo Law Firm, our short sale attorneys are often asked about how a short sale works and why a client would want to consider a short sale. With the economy being down and the housing market downturn in Riverside, San Bernardino, Ontario, and Corona, many homeowners owe more on their properties than they are worth. Homeowners choose to short sale for a variety of reasons such as affordability, divorce, employment, or relocation. If you are considering a short sale, you should consult with an attorney about the legal benefits and consequences of a short sale before making this important legal decision. There are benefits to a short sale such as debt forgiveness and the ability to reestablish credit sooner. In a short sale, homeowners sell their home for less than is owed on their home loan. Ideally, the difference between the short sale price and the purchase price is forgiven by the bank, which includes closing costs, real estate commissions, and property taxes. This can give a homeowner a chance to re establish credit sooner than if they were to go through a foreclosure.
A short sale is also beneficial for individuals because it will speed up the time for a homeowner To buy another home. A foreclosure on a credit report could make an individual considering buying another home much harder and the process would take much longer. Mortgage lenders do not trust individuals with foreclosures on their credit reports and a short sale looks more reassuring. A short sale also has some financial incentives for the sellers because although their property will be sold at a low price, the homeowner may receive financial help from the lender. Some lenders such as Chase and Bank of America offer cash incentives for sellers who choose short sale over foreclosure. The housing market in its current state is a seller’s market, which means that low interest rates and affordable home prices are attracting potential buyers. While a short sale will result in some credit damage, it will allow a borrower to rebuild credit faster, avoid future liability, and even walk away with some money to help with moving costs. If you are facing a foreclosure, contact the foreclosure defense attorneys at De Novo Law Firm for a free analysis of your legal options at (951) 801-5570.