What is a short sale on a home?
A short sale home is sold for less than the balance on the mortgage. The lender agrees in advance to this. A portion of the mortgage is then paid with the proceeds. Your lender may then forgive the difference or require you to pay that remaining balance.
Whether the cause is divorce, job loss, or another crisis, sometimes things go from bad to worse and you can’t make your mortgage payments. A short sale—selling your home for less than you owe—can be an exit strategy.
As a seller, you must provide your lender with proof of financial distress. You won’t be approved if you have the income or assets to finish paying what you owe.
Short sale vs. foreclosure
Homeowners in both scenarios face consequences, including hits to credit score and ability to get a mortgage. The short sale is not as damaging to your credit score as a foreclosure, which stays on your credit report for seven years. In a foreclosure you may also be required to wait up to seven years to buy another house, whereas with a short sale you can often get back into the market sooner. With a short sale, the homeowner finds a buyer, with foreclosure, the lender repossesses the house and puts it up for sale. A short sale can take months, a foreclosure happens more quickly.
Steps in the Short Sale Process
- Consult with real estate agents and your lender
- Get your property listed on the market
- Find a buyer
- Submit the short-sale package to your lender
- Your lender reviews and responds
- The buyer reviews and responds
- Close the sale
Alternatives to short sales
Talk to your lender about a revised payment plan or a loan modification. If you have private mortgage insurance, check to see if the insurer will advance funds to your lender to settle arrears.
You might also consider selling for cash to Homeinc. With Homeinc, you don’t have to do any of the work of preparing for the sale, since you’ll be selling as-is. And you’ll be able to quickly compare offers to get the best possible cash price, and then put that money toward your loan.
If you’re ready to sell your property don’t hesitate to call us (888)850-2636 and one of our agents will be more than happy to present you with a few options.