LIFE AFTER A SHORT SALE
The big questions you will face after a short sale are:
Q: Where will I live?
A: It is important to understand the cost of owning your home was well above the cost of renting a comparable home. Look at the rental rates in the neighborhood where you live. Rents are much lower than your mortgage payment. After a short sale, more likely than not, you will be able to rent a nice home in the same community for 25%-50% less than your current housing payments.
Q: Who will rent to me after my credit score drops?
A: This is why it is important to order a copy of your credit report while your credit is still good. This way you can show a future landlord what your credit was like before this single adverse event happened in your life.
Cash is king and money talks. Be prepared to make a larger deposit and you will surprised how many landlords will take your money. You will end up renting a very nice place for a lot less than your mortgage payment and the monthly reduction in your housing expense will quickly offset your deposit.
Q: What if my credit cards are cancelled or what if my credit limits are dramatically lowered.
A: This could happen so you need to be prepared. Since you will not be making a mortgage payment for four, five, six months (or more) set aside some of the money you save to get a secured credit card. This is a smart thing to do because it will give you a small financial cushion, guarantee that you will always have a credit card and will help to rebuild your credit. Almost all banks will issue you a secured credit card.
Q: What if I need to buy a new car?
A: Buy it now while your credit is still good. A new car by itself will not prevent a short sale. Everyone needs transportation. Use common sense in the selection of a new car.
Q: After the short sale is over will the bank have a right to collect money from me at some future date.
A: No! We make sure to get the banks to state that the short sale will settle all of your liens. There are no deficiency judgments in California for purchase money loans on primary residences. Most lenders will gladly allow the proceeds from the short sale to settle all other mortgages attached to the property as well. In extremely rare instances a lender may request contributions from the seller, but this only happens if a true financial hardship does not exist or if the property is not your primary residence. However, we would be notified of this early on by your lender and would work very closely with our successful negotiating staff to resolve this matter before the close of the transaction.
Q: How long will it take me to rebuild my credit?
A: You can wipe out the effects of a short sale in two years and the government is standing by to help you. Only two years after a short sale the government will insure a loan for you up to $625,000 under FHA guidelines. One loan instead of two. A fixed rate instead of an adjustable rate, no prepayment penalty and all you need is a 3.5% down payment. An FHA loan is not credit score driven. If your credit score is still marginal in two years you can still qualify for an FHA loan under the most favorable lending conditions. As soon as you purchase another home your credit score will soar even higher!
Call (877) 728-5942 or email us at SFFinancial@hotmail.com
Filed under: ShortSaleSolutions
