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 Short Sale
The Benefits & Pitfalls

A short sale allows a homeowner to pay off the mortgage at the price the home sells for, even though it is less than what is owed on the mortgage note.  The lender usually will forgive the difference... the "deficiency".  (Each lender is different on their policy on this, it is best to call us to discuss your particular situation).

The hope is to save a homeowner from a Foreclosure or a Deed In Leiu of Foreclosure situation.  Lenders are willing to consider the short sale option because it is less costly than the Foreclosure procedure for them.

Here are a few of the Benefits as well as the Pitfalls:

Benefits:

• A short sale avoids foreclosure and can salvage some of the homeowner’s credit rating.  Currently a short sale seller will have to wait 2 to 3 years before he/she can buy another home versus 7 years with a Foreclosure. 
• Relieves you of the burden of a home you can no longer afford due to unforseen financial changes.
• Gives you a "fresh start" more quickly than with a Foreclosure or Deed In Leiu of Foreclosure. 
• Usually settles the debt completely if there is one mortgage.

Pitfalls:

• Short sales are complex and every aspect of your financial situation is scrutinized.  There are many documents that will be requested from you and the process can take several months. 
• If you have a second mortgage, the deficiency on this loan is rarely forgiven and the lender will want a payment plan or will Charge it Off on your credit report and that will last 7 years.
• Sometimes that lender will not accept your Short Sale offer and the home gets Foreclosed on anyway.
• Rarely the lender will ask the homeowner to "contribute" to the closing by paying a portion of a mortgage payment. 

These are just a few scenarios. Your circumstances will definitely be unique.  It is important that you call us today to discuss your specific situation. It is important for you to speak with an experience and certified Short Sale Specialist.