For some people facing foreclosure, a short sale is a potential option to address their financial issues. Depending on your exact circumstances, it can help you to escape from a mortgage that you can no longer pay back, but without the stress and pain that comes with the full foreclosure process. But what exactly is a short sale, and what are the potential benefits and drawbacks of doing one?
What is a Short Sale?
A short sale, in the context of foreclosures, is a type of real estate sale where a person facing foreclosure works with their bank or mortgage lender to sell their property before the foreclosure completes. Typically, this sale is made below the amount that the homeowner owes on the mortgage, with the proceeds of the sale going towards paying off whatever the owner still owes. The remainder of the debt is either then paid off by the homeowner, or forgiven by the lender.
What Are the Benefits of a Short Sale?
The primary benefit of a short sale is that it can allow you to get out of a mortgage that you can no longer reasonably expect to pay back. It also partly avoids the potential consequences to your credit that may come from going through with a foreclosure. In some cases, you can also get the remainder of the debt forgiven, allowing you to move on from the sale without any debt to pay off.
What Are the Drawbacks of a Short Sale?
The biggest drawback of a short sale is that you do not get any profit out of the sale. Even when any remaining debt is forgiven, all of the money goes towards paying off the mortgage, not putting money in your pocket. However, it does give you the opportunity to potentially restart your financial future without the threat of severe debt hanging over you.
What Should You Do?
Ultimately, the question of whether going through a short sale is a good idea depends on your specific financial situation. That is why you should speak to a lawyer with experience handling foreclosures, who can advise you on your best way forward. The sooner you call, the sooner they can get to work for you.
At David J. Lorber & Associates, PLLC, we assist clients throughout New York who are at risk of losing their homes to foreclosure. We will explain your options and guide you in making the best decision for your circumstances. Call us at (631) 750-0900 or contact us online to schedule your Free consultation at our Setauket office.
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