CAN SHORT SALE STOP FORECLOSURE?
When lenders are harassing you for payment of debts and you have no immediate means of repaying the debt, it can become a harrowing experience. It gets worse when foreclosure threat is thrown into the mix. What are your options in this stressful situation? Short sale is an option that can help you permanently stop foreclosure.
Short sale as a means for stopping foreclosure
When you are faced with the threat of foreclosure and you can no longer keep up with loan payment on your home, you can opt for short sale. Short sale essentially has more benefits than foreclosure on many fronts, but it still has certain disadvantages.
What is short sale?
Short sale is the sale of a property at a price lower than what is owed on the mortgage for the property. The proceeds from the sale are used to pay off as much of the mortgage as possible. That way, you are able to avoid foreclosure. This must however be done with the permission of the lender.
Short sale becomes an option when:
- The home borrower is facing financial distress over a long period
- Modification or refinancing of the mortgage is not an option for the debtor.
- The debt owed on the property is more than the worth of the property.
- You have been unable to sell the home at a price that can cover the mortgage
- When you are no longer able to pay your mortgage.
The process of short sale is straightforward. Get confirmation and guidelines from the lender, then prepare the home to make it more marketable and prepared for selling. After these steps are taken, you’ll need to complete the required paper work from the lender and return them to the lender. Hiring a short sale specialist to market the property and take care of the other complexities sets you on your way to selling the property. You will also be responsible for setting the sale price with the help of the specialist or agent, reviewing the offers and working with the agent, buyer and the lender to find the most beneficial option for all involved parties.
Advantages of Short sale: It allows the debtor to avoid foreclosure, as well as obtain freedom from an unaffordable mortgage. In addition, the debtor can start repairing his/her credit earlier than a foreclosure will allow. There is also the option of getting relocation assistance.
Downside of short sale: However, there are some downsides to a short sale. It can adversely affect your credit score, but not as much as a foreclosure would. Short sale involves institutions (lenders/banks) and their bureaucracies which can take up a lot of time. The task of finding a new residence and moving can be a daunting task, especially for someone who is already in a financial dilemma.