Homeowners who have suffered from financial setbacks when it comes to their mortgage have found that, in many cases, an underwater home may be beyond their means to handle at the present time and this has led to some lenders and homeowners pursuing short sale options as a way to unload an underwater home loan burden and, potentially, transition a new owner into the property so that the home will not simply be sitting empty and banks will be able to avoid continued increases in their foreclosed home inventory that has not seen much hope of diminishing as of late. Yet, questions often surround the helpfulness of short sell programs as there are some homeowners who are in a position where they have seen their credit score dropped after participating in a short sale, but there are also arguments that despite some drawbacks to short sales they can be more helpful in the long run.
Due to the fact that there can be both pros and cons within this particular type of mortgage sale, homeowners do need to make sure they understand how this will impact their credit score, personal financial situation, and their future financial life before pressing forward, as there are instances where homeowners who have participated in a short sale report a positive experience. Yet, there are also some concerns over the fact that short sellers have taken quite some time in terms of processing and helping those who are attempting to alleviate themselves of their financial burden, but there are other reports coming in that say some servicers are seeing homeowners who participate in a short sale in a much more favorable light than had they allowed for foreclosure or bankruptcy to occur.
Understandably, some homeowners who do participate in a short sale may want to reenter the housing market in the future, but since their credit score takes a hit as a result of a short sale or other financial problems that may be associated with the loss of their home, it could be quite some time before a homeowner’s credit rating is in good standing so they can afford to pay fees and other costs that come with buying a new home, as well as qualify for optimal rates on mortgage for a new home. Yet, these short sale programs are not perfect as we have seen some instances where the communication between the homeowner and the bank or investors may have broken down, problems arose where a short sale was denied and the home was foreclosed and sold anyway, but there are also indications that more banks have begun to use this option as a way to help homeowners transition from their home rather than simply foreclosing in trying to sell the home, at what may be a much lower cost.
Homeowners do need to be aware of certain aspects of these underwater home sales, as homeowners who are simply facing negative equity may not necessarily be able to sell their home at a loss, but a short sale has been used as a foreclosure alternative in cases where homeowners are simply suffering from financial distress, cannot make their mortgage payments, and are facing foreclosure. Again, short sales are not always beneficial and, despite the fact that reports indicate some mortgage servicers see this particular action in a more positive light than other routes that a homeowner may take, successful homeowners who have been able to short sell their home as a result of being in financial distress have been those who typically contact their servicer, a housing counselor, or even a real estate attorney to see what options may be available, whether they can qualify for a short sale option, and how they may simply get the process started if their bank is willing to work with them in this capacity.