What is a short sale and how does it benefit you here in Bloomington?
If you’re thinking about that question yourself, great question!
In this article, we’ll dig into the question, what is a short sale and how does it benefit you in Bloomington?, so that as a Bloomington, Illinois home owner, you can understand your options during foreclosure or if your home mortgage is underwater.
What is a Short Sale and How Does it Benefit You?
A short sale can be a wise strategy to avoid foreclosure (for clarification, here’s a useful definition of foreclosure). Despite being challenging to secure in the current market, short sales can offer a straightforward solution to settle outstanding debt from a loan.
Short sales were prevalent a few years ago when foreclosures surged in the Bloomington market. However, with a decline in foreclosures and an increase in home values, lenders are now less likely to offer short sales as they once did, although they are still conducting a significant number of them.
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Here are a few reasons you may want to consider short sale on your Bloomington home
You Avoid Foreclosure And The Harmful Effects Of It
The primary advantage of a short sale is that you can avoid foreclosure on your home. Your mortgage lender agrees to accept an amount less than what is owed on your mortgage, relieving you of the debt that you are unable to pay.
Foreclosure can result in various financial difficulties, beginning with the limits to securing a new home loan because a foreclosure remains on your credit report 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.
Credit Worries
Foreclosure has far-reaching impacts on your credit. Acquiring a car or renting a house may become impossible through conventional bank loan channels.
If your job involves handling money, your employment may even be terminated if your employer places great emphasis on credit history. This has happened in the past, though it is uncommon.
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.
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.
Short sales offer the seller more flexibility, allowing new home applications only 2 years after the filing (depending on the bank). They also make mortgage lenders more likely to approve loans compared to full foreclosures, enabling faster return to home ownership.
It depends on the specific bank or lender you are working with. If they are causing difficulties a year or two after a short sale, consider finding another bank to work with.
Usually No Fees Involved
A potential benefit of a short sale is that it typically involves no fees from the bank. Banks typically want to remove the mortgage from their books, and if it can be demonstrated that your home is worth less than what you owe (an “underwater” mortgage) and that you are at risk of default, the bank may prefer to negotiate a short sale instead of incurring the cost of a foreclosure.
In a foreclosure situation, your mortgage lender may add additional fees that only compound the financial damage.
It’s important to note that some real estate consultants may charge a fee for assisting in the foreclosure process with your bank. Therefore, be sure to check with them before enlisting the help of a real estate agent or firm.
Our company, Heartland Funding Inc., may be able to help you increase your chances of getting a short sale approved by a bank for your home in Bloomington. To get in touch with us, you can call 800-255-8250 or send us an email through our contact page.
Getting a Short Sale – What You May Need To Provide
To pursue a short sale, you will need to provide the bank with evidence of your inability to pay your mortgage payments. This can be challenging, but it’s best to find a reputable real estate attorney in your area who has experience in this type of law.
If you are unsure of where to start or whether a short sale is the right option for you, please don’t hesitate to contact us. We will provide a free consultation to discuss your situation and inform you of your options, without any cost or obligation.
In some cases, we can even handle the process for you or purchase your home directly from you, relieving you of your mortgage. Our company specializes in buying houses in Bloomington for home sellers who are struggling to sell their homes through traditional means or who prefer not to list with an agent.
Feel free to get in touch with us anytime to discuss your situation. We’re here to help. If you would like to see what we can offer for your home, simply click the link below and complete the form on the next page. We will make a no-obligation cash offer within 24 hours, giving you a clear idea of whether this is a viable option for you.