We’ve heard so many times people asking about what a short sale entails, and how it can be beneficial to Houston residents. More and more people are looking at various avenues they can explore to mitigate foreclosure because that’s the only explanation we can come up with to explain why anyone would be interested in short sales.
But before we delve into all that, let’s first define the term so that everyone can be on board with that this piece is all about or it’s relation to foreclosure in Houston, Texas.
Even though it’s not a common practice in today’s market, back in the day borrowers used to use this method to prevent foreclosure. All an individual had to do was to put the house up for sale at a relatively lower market value and use the sales proceeds to settle the amount he or she owes the bank. However, lenders are nowadays reluctant to consent this option because for one, the cash is usually less than what is owed, and secondly, the market is not what it used to be ever since the recession. In other words, home values have spiked up, and every individual, including creditors, is looking to make astronomical profits after closing any deal.
Reasons why individuals opt for short sales
Mitigating Foreclosure and its aftermath
Without a doubt, no one would want to experience foreclosure at whatever cost. You’ll jump on the first opportunity you get to prevent it. The good news is the money helps you to settle what you owe your lender, and thus leaving you at a better place. Those who have gone through foreclosure will attest to the fact that the effects will in one way or another, cripple you not just financially, but also mentally. Your credit score will, undoubtedly, weaken and getting a second mortgage will be a pipe dream for years to come. One other thing you got to realize is that rental applications require potential renters to disclose their credit ratings. What this means is it decreases the chance of you finding a landlord who’ll be willing to accommodate you in your situation.
Purchasing a new home
For anyone going through foreclosure, it will take them close to seven years before they obtain another mortgage. So the question we should both ask ourselves is, “Are you willing to wait that long?”
With short sales, as a seller, you’ll have more flexibility in that there’s a slight probability you’ll be able to apply for a new home in just a couple of years. We’re talking about at least two years in this case.
No fees involved
The short sale option comes with its fair share of perks. For instance, you won’t incur any charges during the process as the bank only focuses on writing the note off of its books.
The creditor won’t be ready to risk a costly foreclosure in a case where the client’s house is underwater (the home’s worth is less than the owed amount). Any lender will be quick to work out a short sale.