Short Sales Help Homeowners In Default Sell Their Home And Save Their Credit
Today, home foreclosures and short sales are an unhappy fact of life: Approximately
one in every 136 homes in the United States are in foreclosure, according to a report by RealtyTrac Inc.The news is only expected to get worse: With record unemployment, foreclosure filings are expected to hit 3.5 million homes this year, up from more than 2.3 million last year.
The high foreclosure market has lowered property values around the country and ruined the American Dream for millions of homeowners.
But foreclosures don't have to be the final solution for homeowners who have defaulted on their mortgages. If you're a homeowner who needs to sell, but owes more on your home than what it's worth, a short sale may be a good option to salvage your credit and sell your home.
The Benefits Of Short Sales
Many homeowners are confused by the meaning of short sales, but here is a simple definition. A short sale occurs when the lender is willing to accept less for the pay-off balance than what is owed to them, allowing a new buyer to purchase the property at a discounted price.
Short Sales offer many benefits for homeowners who are behind on their mortgages and want to sell their home. The homeowners can avoid foreclosure and save some of their credit.
Homeowners who sell their home using short sales can qualify for another mortgage in as little as 24 months, as opposed to five years after a foreclosure.
Short sales, once unheard of, are now common in today's economy. A bank will often negotiate a property to get the bad loan off its books and avoid the extra costs that comes with maintaining homes after they have foreclosed and become bank owned.
Short sales offer advantages to all parties: The homeowner is no longer burdened with the mortgage; the bank doesn't have to manage a foreclosed property; and the new homeowner gets a home below market value.
The Requirements Of A Short Sale
Homeowners must meet these requirements for a short sale:
Financial Hardship. Homeowners must have had a negative financial change, such as a job loss or illness, that makes it difficult to afford your mortgage payment.
Monthly Income Drop. A lender must see that you cannot afford to pay your mortgage.
Insolvency. Homeowners must not have significant liquid assets that you could sell to pay your mortgage.
A short sale may be the right option for you if your home is in danger of foreclosure.
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