A short sale is one of several tactics used to avert the worst possible consequences of a foreclosure. It is typically used when a mortgage modification is denied and attempts to renegotiate your debt break down. For some people, a short sale can seem like giving up on saving your home, but it can be an important way of protecting yourself and your family. Here are five reasons you should consider a short sale:
- It could reduce the amount you owe on your mortgage
- In a short sale, a home is typically resold for less than the amount currently owed on a mortgage. While this sometimes means you may be responsible for the unpaid amount remaining on the mortgage, you may be able to get your mortgage lender to forgive the outstanding balance. In effect, this could reduce the amount you owe on your mortgage.
- Mortgage lenders prefer short sales to foreclosures
- One thing many people do not realize or consider is that mortgage lenders do not like foreclosures. Not only are they long and costly, but foreclosures leave them with homes they do not want or have a use for. Thus, despite often leaving them with less money than they would get for the full payment of the mortgage, many mortgage lenders tend to prefer short sales over foreclosures, which gets them most of the payment they originally wanted.
- It can protect your credit rating
- A foreclosure can be difficult for many reasons, but one of the long-term consequences of foreclosing on your home is that it can have a serious negative impact on your credit rating. This can make it harder for you to get loans, credit cards, or other sources of financing for years to come. While a short sale can have a more negative impact that, say, getting a mortgage modification, the effect is not nearly as severe as a foreclosure, which can make it easier for you to recover.
- You may be eligible to purchase a new home right away
- Many people who foreclose on a home will find it difficult to purchase a home afterwards. A foreclosure stays in a person’s credit history for seven years afterwards, and many mortgage lenders are reluctant to lend to someone who has a foreclosure on their credit report. However, a short sale is considered a lesser issue, and depending on your circumstances, you may be able to find a new home much more quickly than you would if you foreclosed on your home.
- You can use other methods to help with your foreclosure
- A short sale is just one of several methods available to distressed homeowners, and there is nothing that says that you need to stick to only one method. For example, you cannot even usually consider a short sale until you have attempted a mortgage modification. By using every tool available to you, you can give yourself the best chance to avoid the worst possible consequences of a foreclosure. The only way to know what might work for you is to speak to an attorney knowledgeable in foreclosure defense.
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.