If you’re trying to sell your real estate property but the asking price is too high, a short sale might be an option. Many homeowners are opting for this method due to the fact that it allows them to avoid foreclosure. If you’re considering a short sale yourself, here’s what you need to know.
What is a short sale?
A short sale occurs when your real estate property is worth less than the mortgage you owe. For example, say that you bought a real estate property for $300,000 and took out a mortgage of the same amount. Since then, real estate prices have dropped in your area, and the home is now only worth $260,000. If you want to sell it quickly because you need money right away or simply can’t afford to wait for real estate prices to rise again, a short sale is your best option.
What is the difference between a short sale and foreclosure?
Foreclosure is one of the last resorts for real estate property owners who can’t make their mortgage payments. This happens when you fall at least 12 months behind on your loans, which forces lenders to repossess your home through a court order; it’s not voluntary like a short sale. A homeowner might choose this route if he or she can’t find a real estate buyer who meets the lender’s approval, and that approval depends on factors like credit score.
Does a short sale affect your credit score?
A short sale will have a negative impact on your real estate credit score. The reason is that you’re considered to be delinquent if the lender isn’t paid back in full, which can make it harder for you to secure real estate loans again down the road. Keep this fact in mind before considering a short sale as an option.
It can be devastating to lose real estate property, but it’s better than losing everything. If you can’t afford your mortgage payments and don’t want to wait for the real estate market to recover, a short sale might be an option that works well for you.