What is a short sale?
In the real estate world, a short sale is a transaction in which you sell your home for a lower price than what you owe on your mortgage. “Why would I do that?” you might be thinking. When you sell short, the difference between what you owe and the sale price is usually forgiven by your bank or other lending institution. It is a great way to avoid foreclosure when you just can’t seem to make the payments any more.
A short sale is usually allowed based on certain economic conditions (an example would be right now!) and the homeowner’s financial situation. It offers both the homeowner and the lending institution to mitigate the losses they would incur in the event of a foreclosure.
Remember that a lender or mortgage company will only approve a short sale if they will lose less money on it than on a foreclosure. With so many people going into foreclosure due to the economy and poor lending practices these days, selling short is quite a popular move.
Benefits of Selling Short
Selling short can greatly reduce the negative effect that a foreclosure would have on your credit score. It is also faster, cheaper and easier than a foreclosure (not to mention less embarrassing and stressful!).
If you are struggling to make your loan payments, you might consider selling short on your home. It is of great advantage over allowing your property to go into foreclosure for the aforementioned reasons, and believe it or not, if more people sold short rather than the alternative, it could help improve the economy!
If your home is worth less than you owe on it, take a little time and see whether a short sale can get you out of trouble. After doing some research (great job on that step already!), talk with your lender to discuss your options; they are sure to appreciate your up-front approach and are more likely to work with you than if you just gave up and let your payments slip.
Facts:
It takes five years after a foreclosure to quality for an FHA-backed loan. It takes seven years after a bankruptcy! But in only two years after selling short, you can already qualify for an FHA loan. Are you starting to see all the advantages?
Banks and mortgage companies are approving short sales now more readily than before, when the market was stronger. Thus, there is more competition, and you need to have your ducks in a row in order to improve your chances of everything going smoothly and saving yourself a lot of money, time and frustration.
For more information please visit: http://www.floridalawattorney.com