Short sales can be excellent opportunities for struggling homeowners to sell their homes and be released of their debts. Unfortunately, many people overlook these opportunities out of fear or harming their credit scores. The good news is that this fear is often unfounded, according to Tim Mackey, a managing partner at Mackey Law Firm PC who specializes as a short sale lawyer in Scottsdale, Arizona.
Typically, selling a home via a short sale will not hurt a homeowner’s credit score, explains Mackey, and certainly the process will not be as damaging as a foreclosure would be. For many families, the choice between continually struggling to make ends meet or trying to sell their homes seems easy. Due to universal drops in home prices, however, selling a home for the amount that is still owed on a mortgage is not necessarily an option for every struggling homeowner. For people in situations like these—where the home itself may no longer be worth the amount owed on a mortgage—a short sale is almost always going to be a better choice than going through foreclosure or continuing to pay for a property that one cannot afford.
One concern that many homeowners in this situation may have is finding another place to live if there is a significant drop in their credit scores. With more and more rental companies looking into FICO scores before leasing to new tenants, this is a valid concern.
Luckily, Mackey says that homeowners in Scottsdale who work with lawyers on their short sales can be confident that their credit scores will not be damaged to the point where they won’t be able to find new places to live. In fact, depending on the bank that a homeowner is working with, he or she could be eligible to buy another new house in a matter of just two or three years.
The fact that a homeowner can oftentimes qualify to buy a new home just two years after going through a short sell is a major benefit, explains Mackey, because homeowners who go into a foreclosure typically have to wait a full four to five years before their credit scores are high enough to get a mortgage.
Although filing for bankruptcy—which is another option for homeowners who cannot afford their mortgage payments—will damage a person’s credit score, it isn’t as bad as foreclosure either. Mackey estimates that homeowners who file for bankruptcy can usually get another mortgage on a house an average of two years after their initial bankruptcy filing.
For people whose banks are willing to work with them on short sales, going through the process is almost always the better choice when comparing a short sale to a foreclosure or a bankruptcy. “It is certainly worth trying to do a short sale, as opposed to just letting the house go into foreclosure,” Mackey says.
While a short sale might be the most favorable option for those who are unable to pay their mortgages, unfortunately, short sales can sometimes fall through. Although successfully selling a home through this process is generally better on one’s credit than other options, there are a number of reasons why a homeowner might not be successful in his ability to short sale a home.
The biggest reason why a short sale might not work is if there are no interested buyers. Even if there are interested buyers in the market, that doesn’t necessarily guarantee that the deal will go through. The lending bank’s willingness to accept the deal is imperative in a short sale case, since it is the bank that ultimately has the power to decide whether to accept the offer from the new buyer and discharge the current homeowner of the debt he or she still owes on the house.
Additionally, problems with short sales can sometimes come up when the seller starts the short sale process too late in the game, Mackey explains. Banks are less likely to work with a homeowner who only becomes interested in trying to short sell a home late in the process.
The last major reason why a short sale might not go through is if the person selling the home is trying to do it himself, without the help of a short sale lawyer in Scottsdale. “A lot of our clients have tried to do short sales themselves, and they end up coming to us after they have failed,” Mackey says.
Deciding whether or not to go through a short sale can be a difficult choice for many families, and there is no single solution that works for everyone, explains Mackey. But for many people who have excessive amounts of debts on their homes—and whose banks have agreed to work with them and release them of their deficiencies—a short sale can be an excellent option to release the burden of debt without necessarily ruining their credit scores.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
