What is a Short Sale?

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The economy has people looking for ways to save their homes. What if you can’t refinance to make lower payments or can’t sell your home in this market? DON’T go into foreclosure.

Try to work with your bank to work out a new payment arrangement that works for you and the bank. Show effort to save your home, so your bank knows that you’re serious about resolving the financial situation.

If you can’t work out an agreement, then start thinking about a short sale. It is important that you speak with a supervisor who can make final decisions with your bank to start the process.

A short sale is when a lender accepts a deal to be paid less than the full amount of a current mortgage due. For instance, if your mortgage is $150,000, but your home’s value is estimated at $135,000, you are $15,000 “short,” and that’s not including closing costs. You are essentially paying the lender less than what they are owed. Keep in mind that the lender would have to agree to the deal to sell.

Why is this better than going into foreclosure? Your home has the possibility to sell for nearly what it’s worth compared to losing your home and having your credit tainted by a foreclosure.

There are several factors to take into consideration before attempting a short sale including:

  • Your mortgage is almost in or is already in default.
  • The housing market has decreased your home’s value.
  • You can’t afford to pay due to financial hardships.
  • You have no assets to help pay for the difference.

A mortgage company can decline a request for a short sale if it reviews your taxes and financial statements and assesses that you are able to pay the difference (short). The lender also has the right to look into your personal assets to determine their judgment.

A buyer needs to be setup to purchase your home and the lender has to accept the buyer’s offer.

Completing a short sale is not always the answer, but it can be an option if you are expecting to go into default status. The key is to begin the process before you are late on your payments, so your credit score doesn’t decrease.

Find a Shorewest sales consultant near you who specializes in short sales here.

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Categories: Home Selling, Real Estate News

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