When a homeowner is in a position where they are unable to make their mortgage payments, they may want to turn to strategies to avoid foreclosure.
Thankfully, some options will help their financial health in long run without having while savinng their home from foreclosure.
However, is it truly better than the ladder? A short-sale just might be!
What is a Short Sale?
A short sale is a real estate transaction where a homeowner sells their property for less than the remaining balance on their mortgage with the agreement of their lender.
This happens when the homeowner falls upon financial hardship, such as job loss and it unable to meet their mortgage payments.
The lender will assess the property’s market value and compare it to the outstanding mortgage balance before listing the home for sale.
Once the lender reviews and approves an offer, the sale moves forward with a new buyer and the lender receives the agreed-upon amount from the sale.
The Benefits of a Short Sale
Less Damage to Homeowner’s Credit Score: Even though a short sale can decrease one’s credit score, a foreclosure would negatively impact it far worse. Homeowners can expect their credit score to drop anywhere from 50 to 150 points following a short sale versus 200 to 300 points following a foreclosure.
Short dales are generally also easier to recover from than foreclosures, which can remain on your credit report for up to seven years.
Higher Chance of Buying Again Sooner: It can be extremely difficult to purchase another property if your previous one was foreclosed on. However, after a short sale, you may be able to qualify for another home as soon as two to three years after.
Greater Control In The Process: During a short sale, you will work personally with a lender who will walk you through the process, allowing you to have a greater sense of control than you would during foreclosure when the bank swoops in and seizes your home in a rather abrupt and stressful process.
Is A Short Sale Better Than Foreclosure?
The bottom line is that if you are eligible and are able to coordinate with your lender, a short sale is generally a better option than foreclosure. However, it is important to evaluate your financial situation and determine if you meet the criteria for a short sale.
The Law Office of Todd Cushner & Associates is here to help. For more information about short sales, contact us at 914-600-5502.
