Short Sale
What is a Short Sale?
Simply put,. A short sale is used to describe the sale of a home in which the homeowner owes the bank more that the home is worth. The bank agrees to allow the home to be sold for less than what is owed.
Would I qualify for a Short Sale?
In today’s real estate market, more people qualify than do not for a Short Sale. If you are experiencing financial difficulty of any kind, you may be a prime candidate for a Short Sale.
How will the Short Sale affect my credit?
Short Sales are still a relatively new concept. Banks have the option of submitting the short sale to the credit bureau as "Paid in Full" or "Settled for less than full balance". As far as your credit score is concerned, there is no evidence whatsoever to support that a short sale will lower your credit score. Some have the idea that this is like a bankruptcy or a foreclosure. That's far from the truth! In a short sale, the lender is simply allowing you to pay less than you owe! If you are currently behind on your mortgage or facing foreclosure, the short sale will actually help your credit! How? Because once you are approved for the short sale, all collection activity will STOP and you will avoid foreclosure.
Why would banks forgive the difference?
To mitigate their losses, banks often accept a settlement of less than what is owed on the property. When faced with the option of getting the property ‘back’ through foreclosure, a short sale often makes a much wiser business decision for the bank.
