grayslake real estate lawyerUnfortunately, there are many cases where people may experience financial difficulties that make it impossible for them to continue owning a home. To make matters worse, economic downturns have caused many homes to lose value, and this means that a homeowner may be in a situation where they owe more money on their mortgage than their house is actually worth. If you are in this situation, you may be able to complete a short sale, which will allow you to sell your home and find new living arrangements that you can afford. By understanding whether doing so will provide you with benefits, you can prepare to make the necessary arrangements to ensure that you will be able to regain financial stability.

Advantages and Disadvantages of Short Sales

In many cases, a short sale will need to be approved by the mortgage lender. While lenders may be understandably reluctant to allow a home to sell for less than what is owed, this may be the best option for them, since it may allow them to minimize their financial losses and avoid the costs and legal requirements of a foreclosure. In order to demonstrate that a short sale is necessary, a homeowner will usually need to provide their mortgage lender with a hardship lender detailing the reasons why they are unable to continue making mortgage payments, such as the loss of a job or increased medical expenses. They will also need to provide supporting documents showing their income and the assets they own, as well as a comparative market analysis showing the expected purchase price of the home.

Completing a short sale can provide a number of benefits for a homeowner. It will allow them to avoid the difficulty of going through a foreclosure, and in most cases, a lender will agree to forgive a deficiency, or the amount remaining on the mortgage after selling the home. The fees and closing costs involved in selling the home will be paid by the lender, providing the homeowner with some savings that can be used to secure new living arrangements. While a short sale will have some effect on a person’s credit score, it will not be as harmful as a foreclosure, and a person may be able to obtain a new home loan within a few years.

Short sales do have some disadvantages, including a negative impact on a person’s credit. A homeowner will also be required to move out of the home as soon as the sale is completed, which may affect their ability to save money as they look for a new place to live. In some cases, a short sale may also have tax consequences, since mortgage debt that is forgiven may be considered taxable income. By understanding the short-term and long-term financial effects of a short sale, a homeowner can determine whether this is the best option in their situation.

Contact Our Lake County Short Sale Lawyers

If you are considering a short sale or looking at other options as a homeowner, Newland & Newland, LLP can help you determine the best way to proceed. We will make sure you meet all legal requirements when completing a short sale and help you reach the most financially advantageous outcome to your case. Contact our Libertyville real estate attorneys today at 847-549-0000 to schedule a complimentary consultation.

Sources:

https://www.quickenloans.com/learn/short-sale

https://www.bankrate.com/mortgages/short-sale/

https://www.investopedia.com/terms/r/real-estate-short-sale.asp

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