If it looks like you might default on your mortgage and are at risk of going into foreclosure, then it’s time to learn about a short sale.
In real estate, a short sale is simply when the lender that loaned you the money to buy the property is willing to let you sell it for less than what you owe them on the loan.
So, for example:
Typically, lenders will want some sort of proof that you are going through a hardship to allow you to get rid of your house in a short sale.
Loss of a job, serious illness, divorce or other events that may have drastically changed your financial outlook are all possible hardships that you can use to request a short sale from your lender.
The biggest advantage of a short sale is that you get to avoid a foreclosure and all of the nasty stuff that comes with it. While short sales don’t look great on your credit, they don’t leave the same mark as a full blown foreclosure.
You get to sell your house and move on without all of the hassle and negative consequences of a foreclosure. Remember, next to a bankruptcy a foreclosure is the worst thing you can have on a credit report. Having one can easily knock your credit score down by up to 250 points!
While a short sale can ding your credit 100 points or so, it’s not the end of the world credit wise. Typically, most people who go through a short sale are eligible to apply for another mortgage within 18 months and at reasonable interest rates as well.
Do you really like paperwork? If your answer was “No” then you’re going to really hate going through a short sale.
In order to make a short sale happen you will have to submit a ton of paperwork to your lender. Since they are taking a loss and letting you avoid a foreclosure, it’s completely worth it. However, just prepare yourself.
There could also be tax ramifications to your short sale. In many cases, the IRS considers debt that has been forgiven as income and it could be taxable.
You might be thinking that it seems weird that a lender would allow you to sell your home for less than what you owe on the mortgage.
Now, lenders don’t always approve short sales and they can just as easily let you slip into foreclosure and deal with the property then. But what most people don’t realize is that foreclosures are giant headaches for lenders.
Foreclosing on a property takes a lot of time, money and other resources that banks would rather use elsewhere. Lenders make their money from loaning out money, not from owning and managing real estate. They don’t want the hassle of having you evicted, cleaning and repairing the house, listing the house and going through the sales process.
Yes, a short sale is better than a foreclosure. But do you know what’s even better than a short sale? Not going through one at all!
Before you start down the short sale path, give us a call! D&D Property Solutions can buy your property in any condition and in a fraction of the time than traditional buyers.
You won’t have to worry about time and money consuming improvements or upgrades. You also won’t have to pay a realtor’s commission. And best yet, you won’t have any dings on your credit from a short sale!
Give us a call at (267) 888-8987 today or contact us here to learn more about how we can help you avoid a short sale or foreclosure!