Buying a Home in a Short Sale: How to Speed It Up - Quicken Loans Zing Blog

Finding the home that’s right for you is a very exciting journey, but it can be full of challenges and delays that you can’t always predict or control. This is especially true if the home you wish to purchase is classified as a short sale.

A short sale is the sale of a home or property where the mortgage lender agrees to accept less than the outstanding mortgage amount. The short sale process can last 90 days or more. If you’re the purchaser, this can place you in a very difficult position, especially if you’re also trying to sell the home you currently live in. Here are some options to consider if you ever find yourself in the midst of a short sale with nowhere to live.

Sign a Short-Term Lease

Typically, leasing an apartment, condo or house requires a minimum rental period of one year and comes with lots of rules and restrictions. On the other hand, a short-term lease (a lease that’s six months or less) may be ideal for your situation if you have a little bit of extra money. In some cases, you can find properties where your rental agreement may be month to month – but you’ll often end up paying a premium for the property.

While this may seem ideal, make sure to pay attention to your rental agreement to avoid trouble. For instance, the place you’re looking to lease may not allow pets or may charge an additional fee for having pets in the rental property. Being knowledgeable on these matters can help you save money on your rent.

Sublet a Property or Room

Subletting can be a great idea, especially if you’re looking to stay somewhere for a limited amount of time. However, pay careful attention to the duration of the time the original tenant has left on their lease, because this could impact your plans depending on how long your particular short sale process takes to complete.

There are two types of sublets, and if you don’t pay attention to which one you’re signing up for, you could be in for an unwelcome surprise. The first type of sublet is where you lease a property from a tenant who holds the lease with the landlord. In this instance, you may be fulfilling the expected duration of their lease to prevent them from losing their security deposit or paying rent for a property they’ll no longer be living in. The second form of subletting is when you agree to lease a single room from someone who may be looking to make some extra money. In this case, you’re agreeing to become a roommate of the owner or the primary tenant on the lease.

Extend the Closing Date on Your Current Home

This is a great solution if you can make it happen, as you can potentially stay in your current home until you get approved for your new house. However, this can have some negative effects that you may not think about at first. For instance, you could potentially lose the purchaser of your current home because of the added delay in the closing process. Consult with your mortgage company and real estate agent before considering this as an option.

Move In with Friends and Family

This approach can have obvious benefits for you while you’re trying to get into your home. Moving back in with your parents can help you save some extra money while you wait to see if you qualify for your home. Just think of all of those home-cooked meals you miss out on now! But beware – there’s always a downside when downsizing and losing your own space, even if it is only for a short time. You may need to consider renting a storage unit for all of the things you’ve purchased over the years but don’t have space for at your parent’s place.

Stay at a Hotel

While this has many of the same benefits as moving in with relatives (like free meals and the occasional turn-down service), this idea comes at a pretty steep price. Unlike other options we’ve discussed, you have to pay for hotel lodging by the night or by the week, which could drive up your out-of-pocket costs during a time when you need extra cash the most. You can’t forget there’s also the question about where all of your stuff will go. Hotels have a limited amount of space and will not accommodate all of your furniture and belongings.

Do you know someone who’s gone through the short sale process? What did they do while they waited for their potential new home? Let us know in the comments section below.

 

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