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What you should know if you're considering a short sale

When a homeowner can no longer afford to pay their mortgage, they may opt for a short sale. This is where the home is sold for less than the amount remaining on the mortgage(s). However, the homeowner isn't required to pay the difference.

Therefore, the mortgage lender, usually a bank, must agree to the short sale as opposed to a foreclosure. Most homeowners prefer short sales to having their property foreclosed on if they've run out of options for modifying their mortgage so they can afford the payments.

However, why would lenders agree to a short sale? As the name implies, they're getting "shorted" because the amount they receive for the home doesn't cover the balance on the mortgage.

First, the foreclosure process costs lenders a considerable amount of money. Second, the government, in an effort to decrease the number of foreclosures, has been developing new programs that provide incentives to lenders who find options to foreclosures -- including short sales.

If you're a homeowner considering a short sale as an alternative to foreclosure, it's important to understand that it will negatively impact your credit score. However, the effect won't be as significant as a foreclosure and/or bankruptcy would be.

If you're a buyer who's considering purchasing a home in a short sale, you need to be prepared for the transaction to take longer than a regular home purchase would. There are more people and entities involved.

If you're the homeowner leaving their home via the short sale route, an experienced Florida real estate attorney can assist with the negotiations. Whichever side of the transaction you're on, you can benefit from the guidance of an attorney who can help you better understand the process and work to avoid unnecessary complications.

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