When you keep getting further and further behind on your mortgage, a short sale can be one of the options on the table. Informing yourself about possible solutions and speaking with an experienced attorney can help you make the decision that is best for you.
A short sale occurs when the bank consents to let you sell your house for less than the amount you owe. The lender agrees to accept this amount as full payment.
How a short sale works
Selling short can be especially helpful for people who have trouble making payments and who purchased a home for more than its current market value. Most lenders want you to show hardship before agreeing to a short sale. Further, you do not have to wait until you fall behind. Asking your lender to agree to a short sale as soon as you see financial trouble coming can save you stress and further impact on your credit.
Short sales work better for people who will not suffer from having to leave their home. Factors including family size and availability of affordable accomodations to move into can affect the feasibility of a short sale in your circumstances.
Your credit score
Experts differ as to the extent of a short sale’s impact on your credit score, but most agree it can be substantial. If you sell before missing mortgage payments, you can somewhat reduce the credit score drop.
Negotiating with your lender
As with any other time you deal with your lender, you may want to involve an attorney. Some lenders notoriously give homeowners a hard time or make misleading statements, potentially resulting in serious financial and emotional harm.
Whether you decide to proceed with a short sale or explore other options, dealing with financial problems is often easier if you face them promptly. A serious diagnosis, a job loss or another unexpected hurdle should prompt you to take a look at your circumstances and figure out what to do about ongoing expenses.