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A ‘short sale’ occurs when a bank accepts a discount on a mortgage to avoid a possible foreclosure or bankruptcy. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.
For you, the advantages include avoidance of having a foreclosure on your credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive than a foreclosure. |
Market Conditions Effect on Homeowners
The real estate marketplace has undergone dramatic changes in recent years. More and more buyers are finding themselves in homes they can no longer afford and or which are now worth less than what is owed. In many cases this was made worse by mortgage rate adjustments which lead to payment increases.
As a result, borrowers are unable to pay their mortgages and default rates have skyrocketed. Even borrowers who are capable of paying their mortgage are under a great deal of pressure. They do not want to continue paying a mortgage on a property worth less than what they owe. | |
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Why a Short Sale?
Short Sales are usually undertaken because the homeowner is out of options and does not want to experience the tragedy caused by home foreclosure. Typically when someone is at the point of not being able to afford their home due to; high rates, dips in property values, divorce, loss of employment, decrease of income, etc., then we are forced to make a life altering decision.
If your home is foreclosed on you it will ruin your credit for seven years. That means you will have extreme difficulty finding any bank to loan you money. You can forget about being able to buy another house, a car, open a new business, or even qualify for credit cards. On top of that, the loans you do receive will have incredibly high interest rates as you will be considered a credit risk by credit card companies and banks.
With a Short Sale you have the ability to save your credit from reflecting a ‘foreclosure’ as to simply having a ‘settled debt’. A Short Sale offers a way out of debt and leads to a fresh start.
Reasons to Conduct a Short Sale
- Erase a large debt
- Get debt free fresh start
- Minimize damage to credit
- Take charge over the foreclosure process
- Avoid eviction
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