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Can a Short Sale Help You Recover Financially?

Mortgage debt is a major burden, and that weight can be feel even heavier if you’re also underwater on your home (owe more on your mortgage than your home is actually worth). When you find yourself in this undesirable situation you may be wondering what options you have to try and rebuild your financial standing. What you don’t know is you might be missing a valuable one: the short sale.

What is a Short Sale?

A short sale is essentially an arrangement where your lender agrees to accept an amount less than what is owed on the property in exchange for allowing you to walk away. Both lender and borrower benefit from this arrangement: your lender doesn’t have to spend the costs of putting you through the foreclosure process, and you don’t have to worry about having the foreclosure on your credit history.

Short Sale Consequences

Short sales don’t come without consequences. Borrowers who obtain a short sale are considered to be high-risk in the future, which means interest rates will be higher and some lenders won’t even accept you. A short sale also is visible on your credit history, though it’s not as severe as a foreclosure.

Furthermore, you’ll face restrictions for several years after getting a short sale. Fannie Mae, the federal agency that invests in mortgages, has a strict waiting period between when a borrower obtains a short sale and when they can receive another loan that Fannie Mae will invest in. All buyers who obtain a short sale will be required to have at least a ten percent down payment in order to obtain a loan, and even then they’ll be required to wait a full four years before getting a mortgage. Those who can come up with a 20 percent down-payment will have their waiting period decreased to two years, but no amount of money down will decrease the waiting period below that time frame.

Benefits of a Short Sale

Lots of people find that getting rid of their mortgage dramatically opens up their financial flexibility, allowing them to pay off debts they were struggling with before. This means you’ll be able to rapidly and reliably improve your credit rating, all while keeping your credit history free of both foreclosure and possibly bankruptcy. Likewise, having to wait two to four years to obtain a new mortgage is far less than the seven or more it can take for a bankruptcy to disappear from your credit history, meaning you could get back to owning a home again faster and in better standing than ever before.

If you need help with the short-sale process, let a New York debt attorney help you and stand up for your rights as a consumer! Call the Law Office of Simon Goldenberg, PLLC today at (347) 389-0245 and request a case evaluation today.