Dealing with mortgage payments, the cost of owning a home, and any unexpected expenses in life can be difficult and overwhelming. At some point, you may end up looking for a way to get out of your mortgage payments. If you’re struggling with your mortgage payments, you might be presented with a lot of options, including short sales.
It’s understandable that you might not want to sell your home to avoid mortgage issues. If you’re hoping to stay in your home, the idea of a short sale may be scary, especially if you’re not completely sure how they work. With a short sale, you could potentially stay in your home, but it’s a complicated process and is never guaranteed.
There are a lot of options that can help you avoid foreclosure. If you’re struggling with your mortgage, contact Denbeaux & Denbeaux Law today to learn more about how we may be able to help you.
What Is a Short Sale?
A short sale is when a home is sold in an attempt to avoid foreclosure. Before you sell your home in a short sale, the entire sale has to be approved by your lender. It’s important to consider all of your options before taking any steps. All options to avoid foreclosure come with pros and cons that can make them more appealing, depending on your situation.
How Does Selling Your House in a Short Sale Work?
If you’re struggling to make your mortgage payments, you may consider selling your home to get out of your mortgage. In a short sale, it’s common for homes to sell for less than the amount that’s owed to your lender. It’s common for mortgage companies to lose money in short sales, but they may still prefer it to going through the entire foreclosure process and selling the home themselves.
Before you start the process of selling your home in a short sale, you have to get approval from your lender. You’ll also have to find a real estate agent to work with to find a buyer. Once you find a buyer and the lender agrees to the terms of the sale, you, the buyer, and the real estate agent will have to sign a short sale affidavit.
The short sale affidavit guarantees that the sale is an arms-length transaction, which means that no one involved knew each other before the sale. An affidavit like this is intended to avoid any possible fraud. An important part of the affidavit is also guaranteeing that there are no deals between the parties, such as an agreement to sell or lease the house back to you after the sale.
Arms-Length Transaction
The arms-length transaction is an important part of a short sale affidavit. It tells the lender that you don’t have a personal or business relationship with the seller and that you’re not colluding on the sale price.
If you’re selling to a family member or have an agreement to buy or rent your house back, it’s important to disclose this to your lender. A lender who doesn’t know this information could accuse you of fraud, and you risk being on the hook for the mortgage amount that you owe and any potential legal fees.
For any homeowners struggling with their mortgage payments and considering selling your home through a short sale, you should contact an attorney to make sure you explore all of your potential options, especially if you’re hoping to buy or rent your house back after a short sale.
Can You Buy Your Home After a Short Sale?
It’s technically not illegal to buy your home back after a short sale, but you have to be careful how you go about it to avoid fraud. You will have to swear that there’s no previous relationship between yourself and the buyer. If you do have an agreement to rent your home after the sale, this is considered a business relationship that needs to be reported to your lender. Your lender may approve the sale with the leasing agreement, but it is unlikely that a lender will approve a short sale like this.
Contact a Foreclosure Attorney Today
Short sales can be difficult to navigate, and there are a lot of other options you can explore to avoid foreclosure. If you are in trouble with your mortgage company, you should contact an attorney to discuss all of your options for keeping your home and which option is the best for you.
Contact Joshua Denbeaux today to learn more about how an experienced New Jersey foreclosure attorney may be able to help you explore your options to stay in your home.
