It can be tempting to walk away from the mortgage if you’re behind on a home loan. But a strategic default can do more harm than good. You’ll still owe money to the lender, even if the house is foreclosed. Your credit score will take a hit, impacting your ability to secure a new mortgage. Additionally, you could also owe money to the IRS.
If you’ve run out of options to save your home, a short sale could be the best way forward. But what is a short sale, and how does it help? And what are the disadvantages of a short sale?
What Is a Short Sale?
A short sale is where the house is sold for less than what is owed on the mortgage. It is also called a pre-foreclosure sale since it usually happens right before the house enters the foreclosure process.
How Does the Short Sale Process Work?
To begin, contact the lender to explain the situation and check if you’re qualified for a short sale. If the bank agrees, the next step is to put the property out for sale. If the buyer agrees to a short sale, you must contact the bank asking for short sale status, seeking their approval for the application.
Then, the bank will send an appraiser to estimate the property’s value and approve or reject your application based on this report.
What Are the Benefits of a Short Sale?
While your credit score still takes a hit, it’s much better than foreclosure. With a foreclosure, you will have to wait for seven years before being eligible for another conventional mortgage. You may also feel better knowing you have avoided the worst.
Is There a Better Option?
There are many disadvantages to a short sale. You cannot make any profit from a short sale because the lender takes all the sales proceeds. Plus, the entire process depends on the bank’s approval. And most importantly, your credit score takes a hit.
At Simple House Offers, we buy houses in Massachusetts for cash and in less than seven days. We’ll take care of everything, including closing formalities and transaction costs. You can save money on real estate commission and repairs. We’ll also settle immediately on closing.
As leading cash home buyers in Massachusetts, we promise a free, fair offer. We can give you a price that’s as close as possible to its market value.
When Should You Contact Us?
Call us at 978-925-7355 if you’ve been served a default notice on your property. We’ll make an offer within 24 hours!