A short sale is when the lender on a property will accept less than the full amount due on their loan when the property is sold. You will find people and banks who are trying to avoid foreclosure on a home accept a short sale offer. Most lenders will accept a lower dollar amount because they want to have fewer foreclosures written up in their books, so they don’t end up going bankrupt. A short sale usually will happen when the loans on a property are greater than what the property can be sold for. Property value can decrease significantly in neighborhoods with more foreclosures.
For homeowners a short sale is an alternative option when they can no longer afford their mortgage payments. If you are wondering if a short sale may be the right option for you, read over the next few questions and see how many times you answer yes.
-Do you owe more on you home, then what it is worth? (Meaning if you sold the house, would the price that you can get for it not be enough to pay off your mortgage)
-You are in the pre-foreclosure stages and cannot make your mortgage payments?
-You are facing financial problems and able to prove to the lender that you can no longer make payments to cover the mortgage difference?
If you have answered yes to the above questions a short sale may be a good route for you to consider.
How A Short Sale Can Affect You
Cost-If a lender will accept a short sale; it will cost you some money. First you need to remember you will get no proceeds from the sale, all the money will go to the lender to pay off you mortgage. Expenses you will need to pay for before a short sale will be approved; pest inspections and any maintenance repairs.
Credit Rating-A short sale will lower your credit score; it won’t be as bad as a foreclosure on your report though. In the future though, with all of the foreclosures in America, most people will have some sort of blemish like this on their credit reports, so it is something that future lenders will have to get used to seeing and make considerations for.
Things You Should Know Before Making A short Sale Purchase
Now if you are considering making an offer on a short sale property, you need to be aware of several things before proceeding.
-Make sure you are dealing with a Realtor; who outlines the short sale contingency terms.
-Include a provision in the contract that allows you to withdraw at any time, until the lender approves the sale. You want to be able to get out of the contract without any penalties.
-Get confirmation of submission of the short sale package from the seller and also from the lender when they have received the package.
-Most short sales, the home is going be as is, but make sure you to a thoroughly inspection of the home, so you find out how much money you may have to put into it after the purchase.
-Get a pest report.
-Get all questions answered from your Realtor that is experienced with short sales, before purchasing.
Make sure you do your research and talk to knowledgeable people in the field of short sales. Get all your questions answered and think on it until making a permanent decision. This way you will know that your making the best decision for your situation.
Latest posts by ljspahr (see all)
- Steps Involved In Getting A New Mortgage - December 29, 2009
- Today I Was Forced To Serve A Five Day Eviction Notice - November 5, 2009
- The Paper Trail You Need to Follow to Defend Foreclosure - September 24, 2009