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Short Sale Information

Short Sale Articles

Short Sale a Home

A home short sale allows you to get rid of an unsustainable mortgage without the stress, costs, and credit consequences of a foreclosure. It’s especially useful for people who owe more than their property’s current value, as well as those who simply don’t want to stay in their homes. If you’re struggling to stay current and want to start off on a clean financial slate, home short sales may just be the solution for you.

What is it?

A short sale of home occurs when a bank agrees to accept a discounted payoff for a loan and lets a borrower sell the property for less than what is owed. The lender then considers the proceeds full payment for the mortgage and writes off the borrower’s debt, leaving the latter with little or no financial obligations.

Who is it for?

The best candidates for a home short sale are people who have negative equity; that is, they owe more than their home’s current value on the mortgage. This is why most short sale homes are priced lower than average—the seller is having trouble keeping up and has decided to let the home go instead of letting the bank foreclose.

Of course, one doesn’t have to be in foreclosure or even in default to do a short sale of home. If you’re still current but are at risk of falling behind, you can start looking into home short sales to see if they can help your situation. The earlier you act, the better your chances of getting approved and steering clear of foreclosure.

Why is it Different From Foreclosure?

While borrowers don’t get to keep short sale homes, they don’t have to undergo the entire foreclosure process. The home is listed and sold just like any other, and the homeowner gets to handle the sale from choosing an agent to evaluating buyers. You don’t get to keep your home, but you don’t have to let your lender take over either.

Another advantage of home short sales is that they don’t cause as much damage to one’s credit record. Foreclosures can pull your credit score down by as much as 400 points, while a short sale of home reduces it by 300 at most. And while a foreclosure stays on record for ten years, a home short sale stays for only about five and sometimes won’t even get reported.

When’s the Best Time to Apply?

The simple answer is as early as possible. As soon as you run into trouble, like a reduced salary or an illness in the family, you can call your lender and learn about your home short sale options. You can also call a short sale company to help you negotiate with your lender and carry out the sale faster. Remember, home short sales work on a strict time frame, so the sooner you act, the better your chances will be.