Buying After A Short SaleÂ ...Â Yes, You Can!
Short Sales occur for a variety of reasons. Regardless of the causal circumstances, as the reality of a Short Sale sets in most Sellers experience many emotions and sometimes fears. Most are initially value and morally driven, ie.- "I was raised to pay my bills!" Of course so were the many millions of other Sellers that have been forced to sell short due to the current economic circumstances. After understanding that they are a victim of circumstances and "normal" today comes the next question, "What are the consequences if I do a Short Sale?"
There are numerous consequences, and it is important to understand that they are not forever. There are ways to expedite financial recovery and home ownership. Many of the historic negative consequences are currently mitigated. The taxation on debt relief has been removed for primary homeowners meeting certain criteria until fall of 2012. The "social stigma" of Short Sales is now minimized due to their sheer volume, between 30% and 70% of the market depending on when and where you sample the market.
So what happens after you've sold short? If the cause of your need to sell short is legitimate you can get a new loan within two years. What is legitimate? Your ability to make your payment was impacted by job loss, medical bills, divorce, etc., and not a strategic default. So you can get a new loan in two years, but what do you do in the interim? You can lease with an option to buy with the right Seller. Set the terms so you can get a new loan when it is time to exercise the option.
With home prices incredibly low, many Short Sale sellers would rather buy now than wait two years. This can be accomplished in certain circumstances. If you have a 401(k) account you may have the means to buy now. You can take your funds and put 50% down on a home presently devalued. That would put you in a great position to secure owner financing, or a private loan. If you are in a position to do this, be sure your credit is otherwise good. You can ask a lender to prequalify you for your eventual refinancing of your interim acquisition loan.
Our Advice: This isn't for everyone, but if circumstances warrant it, you can buy now and enjoy the benefit of the very low home prices. Other benefits - you won't have to move in to a rental and then again in two years; you will enjoy home ownership benefits, i.e.- tax deductions and very likely substantial appreciation; you can make home improvements to enhance your living habitat. There can be tax benefits, and potentially a better rate of return on your investment. Regardless of the financial return, there will undoubtedly be a great emotional return on your investment. Be careful reinvesting your retirement funds - look at all aspects and consequences of this type of investment.
Whether you are in a position to use 401(k), or a friendly family loan for a down payment, there are ways to buy now. If you can't buy right now, understand that you will be a Buyer sooner than you think so plan your future. Watch the market, build your credit, reduce your overall debt, and understand that in a few years this will be a distant memory. Your world has not ended, you are just beginning a new experience.
When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. firstname.lastname@example.org, www.carsonvalleyland.com
When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless! Â Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472.Â email@example.com, www.carsonvalleyland.com
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Lisa Wetzel and Jim Valentine are the authors of this blog.Â Lisa, JimÂ and Jessie are experts in Carson Valley , Carson City and the tri-county area of Â Douglas County , Carson City and Lyon County.Â Call our team anytime at 775-781-5472 or 775-781-3704.Â To Search for Homes go to: Carson Valley Listing BookÂ or visit our website at www.CarsonValleyLand.net or Â www.CarsonValleyLand.com