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Have the pandemic lockdowns affected your income or finances in a negative way? Have you fallen behind on mortgage payments? If you’re trying to prevent foreclosure and protect your credit score, a short sale may be of interest to you.
What is a Short Sale?
A short sale takes place when a homeowner can no longer pay the mortgage or needs to get rid of their home but the amount left on the loan is more than what the home is worth. They end up selling the house for less than what is owed to the lending institution once the lender signs off on the decision.
Sometimes people are put off when a realtor recommends a short sale yet a short sale might be the best option. Keep reading to learn the benefits of short sales.
- Keep Your Dignity
When you choose to sell your home with a short sale, it allows you to retain some of your dignity. Losing your home to foreclosure carries a stigma and ends up making you feel embarrassed about your financial situation.
- Buy Another Home Sooner
Under guidelines set forth by Fannie Mae, you can buy another home in two years rather than waiting five to seven years as you would after a foreclosure. In instances where your credit report doesn’t show any late payments, you’ll be able to purchase another home a lot sooner than you thought.
- Protect Your Credit
Short sales may not negatively affect your credit rating if you get the bank to agree to refrain from reporting the shortage. With a short sale, the homeowner is still obligated to pay the deficiency in some cases. This is the downside of a short sale. Making regular payments helps keep you in good standing with the credit bureaus.
- More Control
When your home goes into foreclosure, there’s not much you can do. You end up dealing with the bank’s attorneys. With a short sale, however, you have a more active role. You work with the bank, the person buying the home, and the real estate agent and are part of the negotiations.
- Better For The Housing Market
Foreclosures lead to a drop in home values. Short sales help revitalize neighborhoods because they allow home buyers to get into homes at affordable prices.
Do you owe more on your home than what it’s worth? These are known as upside down mortgages. Learn five things you can do when your mortgage is upside down.
Benefits of Short Sales
Now that you know that short sales can salvage your credit to a certain degree and lessen your financial burden, will you consider it as a pre-foreclosure option? Speak to a financial advisor to discuss the best avenue for you to take. Get back on track to reaching your financial goals.
Did you find this information helpful? If so, stick around and browse through our other articles under the finance tab. We also cover topics like technology, home, health, and more.
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