The Factors to Consider With a Short Sale

It is easy to panic when you live under financial pressures, and especially when the home you live in is the source of major financial pressure. This is why you need to consider all of your options before you throw in the towel.

Yes, this is something easier said than done when a mortgage payment is due and there is no money to pay it. However, you do have options and as the old saying indicates “knowledge is power”. So, let’s take some time to gain the knowledge you’ll need to regain your power – no matter how bad the financial pressures.

The Short Sale is Not a Foreclosure

Surrendering a home to the lender because you cannot make the payments, or because you have fallen so far in arrears that you won’t be able to catch up is often the beginning of a foreclosure. In many areas a property of this kind is viewed as a “distressed property”. It is not, however, where things have to go in a short sale.

Rather than things reaching such an intense level, the short sale process can begin almost as soon as you realize you have too many financial pressures. For instance, when you see that your budget is only going to hold out for the next 90 days and then you will start to be unable to make bills. This is the ideal time to get started.

You can meet with a real estate professional who specializes in short sales that very day and start to discuss the options. They can help you put together a special package of information for the bank, and they will be crucial in providing pricing on houses comparable to yours. Then, you can head to the bank and begin negotiating a short sale arrangement.

A Major Oversight

At this point in the process it is a wise idea to consider the issue of deficiency. This is the difference between the sale price and the outstanding balance on the mortgage. As you may or may not know, you can still be held liable for this amount if the bank does not agree to release you from that responsibility.

Knowing the consequences of a short sale involve this liability. The good news is that a lot of lenders are willing to release a borrower, for a fee. These vary from region to region, and a real estate expert will be able to share the details and what they know about this common issue.

The Credit Issue

Finally, a lot of sellers don’t realize that the impact of the short sale is going to vary based on delinquency.  In other words, if you allow yourself to fall far behind on the mortgage prior to the short sale, it is a double whammy to the credit score. However, if you are able to get ahead of the game, negotiate with the lender early, and begin the process months before you run into true financial trouble, the outcome will be the best possible.

 

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