With homeowners defaulting on their mortgages at a record pace, many people are practically begging their lenders for some form of relief or assistance in order to prevent themselves from ending up on the street. While it is certainly disconcerting to receive collection letters and threats of impending foreclosure from a lender, those who are falling deeper into debt and enduring difficulty making their monthly mortgage payments need not despair. The “short sale” is one alternative worth considering as a viable means for resolving your debt with the lender and dealing with a home that is no longer affordable. Here are some basics you need to know before starting the short sale process<\/b>.<\/p>\nWhat is a Short Sale?<\/h2>\n
A \u201cshort sale\u201d occurs when the net proceeds from the sale of property is not sufficient to satisfy the outstanding mortgages on the property, and the seller does not have the financial ability to make up the difference. The lender is asked to take less than the full amount owed in order for the sale to be completed<\/p>\n
Sometimes a short sale is brought about because the homeowner borrowed more than he\/she could afford to pay back and miscalculated his\/her financial status. Often, the short sale arises because of an unforeseen change in the homeowner\u2019s life, such as a long-term illness, disability, divorce or loss of employment, which has dramatically affected the person\u2019s income such that the mortgage payments are no longer affordable.<\/p>\n
A foreclosure can have a devastating impact on someone\u2019s credit report that has a lasting effect for years to come. A short sale<\/a> is typically reported on a credit report as a debt that is \u201csettled for an amount less than what is due\u201d. While this will cause a dip in credit score, it will be nowhere near as harsh as the reporting of a foreclosure.<\/p>\n The answer is very simple: Lenders do not want to own houses. Lenders are in the business of loaning money, not in the business of stockpiling real estate. There have been numerous reports that banks can face fees of up to $50,000.00-$60,000.00 in actually foreclosing on a property. From a business standpoint, the lender will make out better if the property is put on the market and given an opportunity to attract a buyer through private sale.<\/p>\nWhy would a lender agree to a short sale?<\/h2>\n
How does the short sale process work?<\/h2>\n