When you purchase your new home, you never expect the worse to happen – that is, to lose it because of an unexpected economic hardship or a real estate market crash. As if the thought of losing it isn’t enough to worry about, the foreclosure process can be just as strenuous and stressful. There’s another option, though – a short sale.
What is a Short Sale?
In a short sale, the bank lets you – the delinquent homeowner – sell your home for a substantial discount (less than what you owe). This benefits lenders, allowing them to recoup the majority of what they’re owed and saving them the expense of filing a foreclosure suit. Although a short sale doesn’t pardon the homeowner from his or her debts on the original mortgage, it can be better than a dreaded foreclosure.
- Short sales can be better for your overall credit than foreclosures
- Short sales can help you save more money than foreclosures
- Short sales are better for the overall housing market than foreclosures
- Short sales offer delinquent homeowners more control over their situation
What are the Risks of a Short Sale?
Although a short sale might be a more favorable option than a foreclosure, there are still risks every homeowner should keep in mind when considering the two options. Deficiency judgments, taxable income and the overall sluggishness of the process are some of the biggest risks homeowners face when deciding on a short sale. Investigate each possible risk further so you know exactly what to expect.
Whether it’s a short sale or a foreclosure, there’s no easy way to say goodbye to your home. But if you remain patient, explore all your options and carefully consider the best choice for your situation with an attorney, you might sleep a bit better at night.