Trying to sell a house in a time crunch doesn’t always work out the way you would hope. Say you lose your job, you get a divorce, or you have some costly medical emergency, and it becomes impossible to afford living there anymore. Because the real estate market is so finicky, it can be months before your property has any offers-that is, if it receives any at all. This is especially true if you owe more on your mortgage than the house is worth and are trying to compensate with a higher price. Without being able to afford the payments, you can end up in default, foreclosure, and seriously impacting your credit score.
Benefits of a Short Sale
In cases like these, it can be beneficial to both you and the bank to settle on a short sale. A short sale is when a property sells for less than what the owner still owes on the mortgage. These can be difficult to organize as the bank is technically losing money, and they don’t always work out. But they come with some significant advantages over opting to foreclose due to nonpayment.
-Unlike a foreclosure, there is no heavy social stigma of a short sale. While it can knock your credit score down, it doesn’t haunt you the way a foreclosure would. Plus, if you decide to default on rent, it gives you the added benefit of living rent-free while the short sale is processed.
-If you are worried about what would happen to your home in a foreclosure, another benefit of a short sale is that you can meet the new owners before selling.
-When you opt to foreclose, you typically cannot buy another home for 5-7 years; however, after completing a short sale, you can customarily buy one in 2-3.
-Banks are more likely to want to short sale rather than foreclose because it can be expensive to maintain and sell the house themselves. In some cases, the bank has offered monetary incentives to homeowners to follow through on a short sale.
If you owe more on your mortgage than your home is worth or you’re having financial hardship leading you to not be able to make payments, give us a call at Tudhope Law. Not only can we help you decide your best course of action, but we work aggressively to negotiate with your lenders. Call us a 407-969-0044 and give yourself a fresh start.