What Does Short Sale Mean?
A short sale allows you to sell your house for less than what you owe on your mortgage.
It is an alternative to foreclosure, where the bank takes ownership of your home to pay off what is owed.
If you answer yes to both of these questions, a short sale is your best option:
- You Owe More on Your House Than It Is Worth
- You Need to Sell Your Home
Walking away and letting your home foreclose has serious consequences. The lender can come after you for the amount that is still owed. It will hurt your credit score. There is often a tax penalty.
In most cases with a short sale you have no out of pocket costs and the deficiency balance is waived by the bank. This allows you to sell your home and get on with your life debt free.
If you need to sell your home because of divorce, job relocation, can no longer afford your home, your loan modification process is going nowhere then a short sale is right for you. In most cases, the bank will forgive the difference.
How does a short sale affect your credit? It depends on how far behind on your mortgage payments are you are. We can tell you that your credit will recover sooner with a short sale because foreclosures usually take much longer and you will be able to qualify for another mortgage faster. Lenders typically will consider giving you a home loan as soon as two years after a short sale, versus up to seven years after a foreclosure.
For people who must move because of a change in life circumstance or can no longer afford the house, a short sale is still the best option.
You can qualify for a short sale even if you can afford your home but need to relocate. Many people think they need a horrible hardship in order to qualify for a short sale but that’s not always the case. We have many clients who could afford their home but needed to relocate either because of a new job or because of a growing family. We have also had clients who haven’t paid their mortgage in 1-2 years and still have done Short Sales.
Do You Qualify?
Additional Resources:
HAFA Program Benefits and Requirements
