If you are facing a foreclosure because you haven’t been able to pay your mortgage, one of the things you may be able to do to avoid foreclosure is to commit to a short sale. A short sale can help when you are not able to get a loan modification or when you want to move but owe too much on your property based on its value.
Short sales can create win-win scenarios, which is why lenders are sometimes open to them. The bank doesn’t have to go through with the expense of foreclosing on the property. A lender gets the majority of their money back through the sale of the property (in many cases) and there is no foreclosure on your credit to harm you in the future.
Short sales are often used by distressed homeowners
Short sales tend to be used by those in financial distress, because they are not nearly as damaging as a foreclosure. Additionally, there is a potential that the home may actually sell for the value of the mortgage or more. If that does happen, then the seller could walk away with profits even though they once thought that a short sale was the only answer.
It’s beneficial to look into a short sale if you would like to stay in your home, too. Usually, you will be able to stay in your home until the short sale completes. This is unlike foreclosures in which you’d need to move out as soon as the bank forecloses on the property.
Protecting your credit and reputation is easier with a short sale
Since a short sale does potentially cut back on the amount of money that you pay back to the mortgage lender, it’s likely that you will see some damage to your credit report. However, because you were able to sell the property instead of foreclosing on it, you’ll be in a better position to get credit and continue building up your credit score.
No two situations are alike, so it’s a good idea to learn more about how a short sale works and if it is the most beneficial option available to you in your situation. Other options may exist, like seeking a loan modification or other supports.