Reasons a Short Sale Might Be More Appealing
If you find yourself in a situation where you need to sell your home and you are struggling like many other home owners who have a mortgage which exceeds the market value of your home, then a short sale may be your best solution.
Do not feel you must have a desperate reason to justify your need for a short sale. There are numerous hardship reasons on why you may have to to sell your home. Some of these include loss of employment, reduced wages, divorce or separation , overwhelming debt, military service, death in the family, medical hardship, mortgage rate adjustments, business failure, and job relocation.
Here are possible benefits of choosing a short sale over foreclosure;
Forgiveness of Debt
For many home owners, the biggest benefit of a short sale is the forgiveness of debt by their lender. Many clients find it hard to believe their bank will actually settle for less than what is owed on their mortgage. Banks will usually prefer to mitigate their losses by settling the debt through a short sale. The foreclosure process for banks is a more expensive option which can sometimes drag on for many years. It is in the bank’s best interest to settle the debt as efficiently as possible to avoid further losses.
Impact on Credit
One of the biggest concerns people have is effect a short sale will have on their credit scores. The general consensus is that a short sale will have less impact on a credit score versus a foreclosure. A foreclosure could drop your credit score by roughly 200 to 300 points. A short sale may only drop your credit score roughly 50 to 150 points, as long as you are current on other debt obligations.
Purchasing a Home Again
With a short sale, you are more likely to obtain a traditional mortgage on a new home in as little as 2 years following a short sale. If you are foreclosured upon, you will likely have to wait at least 7 years to acquire a traditional mortgage.
Depending upon the situation, some home owners may be eligible for relocation assistance through the Home Affordable Foreclosure Alternative (HAFA) Program and/or a Seller Incentive payment directly from their lender to help encourage underwater home owners to consider a short sale. HAFA may provide $3,000 in relocation assistance to the home owner. A few lenders may contribute as much as $35,000 in relocation assistance.
Having your home sold by the bank through a foreclosure auction can be a traumatic and embarrassing experience to many families. With a short sale, home owners can exit a bad situation more gracefully. If done properly, friends, family, and neighbors may not even discover that you are losing your home.
If you are unable to stay in your home and you are ready to sell, please contact me to help guide you through the short sale process.
Originally posted 2013-01-02 15:22:59.