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Using a Short Sale to Beat Foreclosure

Are you facing the threat of foreclosure on your home? Fortunately, there are ways around a foreclosure, and you need to be looking for the best way to beat foreclosure in your life. One of these ways is by using a short sale. Do you know what a short sale is, or how it works? Before you enter into a situation, especially with your home, you need to make sure you know all the details. Read up on how you can best use a short sale in your life and come out on top while doing so. Nobody should have to settle for foreclosure if there are other options out there.

What is a Short Sale?

You face foreclosure when you can no longer make your mortgage payments, and your home is worth less than you actually owe on it. This is also a time when short sale can come into the picture. A short sale is the sale of your home, but the money you get is less than what you owe on the mortgage. You will need to talk with your lender before you do this. Lenders will agree to this when they feel as though taking a small loss is better than going through a long foreclosure process. The lender will then forgive whatever debt may remain after the short sale. If you have stretched yourself to the limit and you do not know where to turn, a short sale might be your best option.

A Potential Win-Win

The great thing about a short sale is that it has the potential to help out both the seller, who is in financial trouble, and the buyer. A short sale leaves the seller with an option to get out of their mortgage responsibility with letting bankruptcy into the picture. The buyer is helped out because they will receive a property at a discounted price. Getting property on a discount is something that all buyers need to look for. Lenders can even benefit because the loss on a short sale will be less of an impact than a foreclosure process in which they are left with an unsalable property. It is hard to believe that every party can come out on top in this process, but it is true. Just make sure you are not rushing through.

Make Sure...

First and foremost you need to protect your credit rating. A short sale will have some sort of impact on your credit, just make sure you know how much. Talk to your lender about this before you finalize the short sale. It should not hurt as much as foreclosure. Second you need to make sure that you get everything in writing. The thing you need to make sure you get the most is a lender agreement to forgo all your remaining debt after the short sale. This is the whole reason behind the short sale, so do not forget it. There are also some tax situations you can enter into with a short sale, so make sure you have the right tax advice. This situation needs to be handled as properly as possible from the beginning.
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* Updated Jun 8, 2012