What is a short sale and how does it benefit you here in Minneapolis St Paul?
If you are in the Twin cities area and you’re thinking about that question … great question! We are going to give you some information on short sales and the benefit that will give you when you sell your house.
In this article we’ll dive into that question so you as a Minneapolis St Paul Minnesota home owner can figure out what your options are during foreclosure or just if your home mortgage is underwater. The earlier that you go after this in your situation the better.
What is a Short Sale and How Does it Benefit You?
A short sale can be a smart way to mitigate a foreclosure (here’s a great definition of what a foreclosure is in case you’re not sure) on a mortgage, although they can be difficult to attain in today’s market as well saw lots of them go threw in 2008 real estate crisis and banks had to forgive millions of dollars because of them. When understood and used correctly they often prove to be a simpler way to resolve any debt left over from a loan.
Short sales were really common in the market a couple years back when the flood of foreclosures hit the Minneapolis St Paul market… but as foreclosures have slowed down and home values have climbed back up a bit… lenders are a little less likely to offer a short sale as an option as they used to be (but they are still doing a lot of them!). If we see a downturn in real estate values again with the Corona virus, and people getting behind on payments and have to choose what to do when they are facing foreclosure, they short sale might be easier to do again. Time and the attitudes of the lenders will determine that.
Here are a few reasons you may want to consider short sale on your Minneapolis St Paul home
You Avoid Foreclosure And The Harmful Effects Of It
The best benefit of short sale is that you avoid a foreclosure on your home. Your mortgage lender accepts less than what is owed on your mortgage, leaving you without the debt that you cannot afford. You may have to pay a tax amount on the difference between the amount owed and the amount that the house sold for in a short sale. Lenders are sending out 1099 tax statements stating that you are gaining a value without having to pay that amount back and should consider it just like normal income. That is where the tax may come in for you.
Foreclosure can lead to all kinds of financial problems, starting with the inability to obtain a new loan for a home because a foreclosure stays on your credit record usually for up to 7 years.
Even renting will become more difficult as your credit score would be affected, and you often have to disclose a foreclosure on a rental application. Foreclosures can also last a long time (up to 7 years as mentioned above), making you wait years to even qualify for a new mortgage. In Minneapolis Minnesota , there are new laws for renters where landlords can not use credit score to eliminate you from renting a unit or house. So if you go threw a foreclosure in Minneapolis you still should be able to rent without much of an issue. Anywhere else its an issue.
With a foreclosure, you face all kinds of ramifications with your credit. Buying a car and getting credit cards may be impossible through the normal bank loan routes.
If you work with money at your job you could even face termination if your employer puts a lot of stock in that kind of thing (most employers won’t but it has been done before).
A short sale relieves the debt that is left over from what is owed on the mortgage, letting both the bank and the seller move on. A short sale is also easier on your credit score, which can allow a homeowner the ability to recover in the long run. Your credit report will only show a pre-foreclosure status, which reduces your credit rating minimally compared to a foreclosure. From the standpoint of someone pulling your credit report it is so much better to see a pre-foreclosure on your record than a full Foreclosure. That is another benefit of a short sale.
Buying a New House
A foreclosure can last for a long time, making it impossible to purchase a mortgage again for up to 7 years. Think about it, lets say you are 40 years old when you go threw the foreclosure. It might take 2 years to get to the end of the process, then you have another 7 years of waiting for the foreclosure to be taken off of your record. You will be 49 years old, thats a long time.
Short sales offer a little more flexibility for the seller, allowing new home applications only 2 years after the filing depending on the bank. It also makes a mortgage lender more likely to approve your loan than if you had a full foreclosure, getting you back into a home faster. Normally, lending companies are not loosing as much with a short sale as they are with a foreclosure.
Again, this all depends on the actual bank / lender you’re working with… so if they’re giving you a hard time a year or two after a short sale… shop around and find another bank to work with. Smaller community banks tend to be more open to the situation or independent lending companies that have independent loan officers.
Usually No Fees Involved
One potential benefit of the short sale is there are usually no fees associated with the process from the bank. The banks just want to get the note off of their books… and if it can be proven that your house is “underwater” (you owe more than your house is worth)… and you’re at the risk of walking away from the house… the bank may rather work out a short sale instead of going through a costly foreclosure. This became so clear to the banks back in 2008 and we might see this happen again the fall of 2020 depending on what happens in our local real estate market and jobs.
With a foreclosure, your mortgage lender may tack on extra fees that only make the damage worse.
Some real estate consultants may charge a fee for helping facilitate the foreclosure with your bank… so check with them before you enlist a real estate agent or firm in helping you with this. With a short sale, real estate agents are still paid their fees but they really have to work for it as they work directly with your bank showing them the offer and trying to get the bank to take such offer. Good agents here are worth their weight in gold.
Our company, Minnesota Cash Home Buyers may be able to guide you in the right direction on how to give yourself the best shot at a bank approving a short sale with your Minneapolis St Paul area house… so connect with us by calling (612) 444-5088 or shoot an email to us through our contact page here.
Getting a Short Sale – What You May Need To Provide
You will have to provide the bank with proof of being unable to pay your mortgage payments (letter of termination for job, health bills, etc). This can be difficult and is best resolved by finding a good real estate attorney in your area that has experience dealing in this type of law.
If you don’t know who to contact or where to turn to see if a short sale may be a good option for you… get a hold of us.
We won’t charge a thing to discuss your situation with you and let you know your options. You may have options you did not even think about, this is what we do as real estate investors and professional home buyers.
And we can even give you guidance and pointers at absolutely no cost or obligation. FREE
Sometimes we’re actually able to do the work for you or even buy the house from you to get you out from under that mortgage… so that may be a viable option for you.
We buy Minneapolis St Paul houses and we work with home sellers like yourself who are having troubles getting out of your house the traditional way… or who can’t (or don’t want to) go the usual route of listing with an agent.
Get a hold of us anytime to discuss your situation. We’re here for you!
Or, if you want to see what we can offer on your house… click the link below and fill out the form on the next page. We’ll make a no-obligation cash offer to you within 24 hours. At least that way you know whether that is an option for you or not.
Who knows, you could contact us and be done with this whole nightmare within a few weeks.