A wise mentor of mine once taught me this concept:
Crisis + Time = Humor
Over the last few years, more than just a few homeowners have went through the short sale process – and from what I can put together, there will be people trying to decide whether a short sale is right for them for years to come.
For better or worse, I happen to be an expert on the subject of “what to expect after a short sale” because it was about 2 1/2 years ago now that I finalized a short sale after not making a mortgage payment for a year.
Now that I am an expert? Here are a few simple things of what you can expect after a short sale if you have missed 12 payments on your mortgage leading up to the short sale.
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Expect Your Credit Card Companies To Cancel Your Account
- Bank #1 – $50,000 limit
- Bank #2 – $40,000 limit
- Bank #3 – $35,000 limit
- American Express – $12,500 limit
My personal credit card spending always has been fairly high each month because I run quite a few business expenses and collect frequent flier miles. Historically, over the last 10 years or so, I probably charge on average $10-$30k per month and generally don’t keep a balance.
Right after my short sale, I got a notice from American Express that my account was being cancelled. I can’t say that it was unexpected – but I can say that they were the only company who cancelled my credit line – which leads me to the thought:
American Express can kiss my ass.
(Yes Justin McHood talks like that often, follow him on Twitter and see.)
The topic of customer loyalty and what makes people stick with you or abandon you as a company is a topic I don’t have room to ramble on about in this post, but I’ll just leave it for now with the statement that automated decision making can sometimes backfire on you.
The banks who didn’t cancel my card?
I am now a customer for life and happily in their “elite status” group of people who moved more of my assets under their management for the simple reason that they stuck by me when I needed them.
When short selling your home, expect your credit card companies to cancel your account. True, they may not – but expect them to.
Expect To Get Divorced
I was married for 17 years and short selling a house was the straw that broke the camel’s back so-to-speak.
I can’t say I didn’t see it coming – but if you are married and having trouble, don’t expect a short sale to help your relationship.
The reason you should expect to get divorced in my opinion is if you expect it to happen and it doesn’t – well, lucky you.
Every situation is different, but if you are reading this and you know that you already have fissures in your marriage, expect it to fracture completely around the time you short sell your home.
When you two people are going through a financial trough, it just seems easier to split it all up than it does when you are on top of the world.
Again, just my experience – and it may or may not apply in your situation.
Expect To Have Housing Options
I actually bought a house in the same subdivision the exact same day that I short sold mine.
Lucky? Maybe. Possible? Absolutely.
The most common expectation that many homeowners have when short selling a home is that they will be renters for at least 2 years before they can qualify for a mortgage again.
People are getting mortgages right after they short sell a home through various loan programs.
Sure, they may not be FNMA or FHA mortgages, but it is certainly possible to buy a home 1 day after a short sale if you have seller financing and it is even possible to get a USDA or FHA loan under certain circumstances.
If you are interested in buying a home right after a short sale, the most important thing you can do is to continue to make your payment right up until the end.
Expect To Have Legal Troubles
If you have short sold your house, expect the bank to try to come after you at some point. For something.
Maybe, maybe not.
In my case, I wasn’t too worried about this because I hired the best mortgage lawyer (in my opinion) to advise me through the short sale process.
If you are considering short selling your house, I can’t recommend enough that you retain legal counsel to advise you through the process.
It has been my experience that there is nothing more expensive in life than cheap legal advice.
The Last Laugh
Two and a half years after a short sale, I can’t help but feel like smiling at what was one of the most awful situations I have been through in life. Many others I talk to feel the same way.
Maybe that old wise man was right when he said “crisis + time = humor”.
The only group of people who seem to have found more humor than I found?
They have managed to find a solution to the problem of negative equity – while the homeowners who have elected to stay in their homes and continue making payments even if the home is worth 50% less than what they paid for it are still looking for an alternative solution.
What should you expect after a short sale?
It has been my experience that life has a lot more humor to the awful situation of short selling your home the more time that passes.
Disclaimer: Thompson’s Realty is not a law firm, and a law firm is *exactly* who you should be consulting with prior to entering into a short sale, default, foreclosure or any other form of default / breaking of a contract. ANYTHING can happen and every situation is different. TALK TO AN ATTORNEY.