A short sale is when you sell your home for less than what you owe on your mortgage. While it may sound like the answer to your problems — and it may be — your lender must agree to the process before you can move forward. If they do, all proceeds from the sale go toward paying off the balance, with the rest dismissed.
A short sale is one of the top alternatives to foreclosure and it typically makes sense if:
- You are not able to modify or refinance your mortgage
- You are dealing with a financial hardship that’s expected to last into the future
- You owe more money than what your home is worth
- You are unable to afford to continue living in the home
Here are some of the many benefits associated with a short sale:
- Eliminate your mortgage debt
- Avoid foreclosure and the negative impact associated with it
- Opportunity to begin repairing your credit sooner rather than later
- Easier to purchase another home in the future than if you went through foreclosure
A short sale works for some people, but others learn that it has nothing to offer them. If you’re unable to take advantage but don’t want to lose your home to foreclosure, bankruptcy is often the next best option.
With a bankruptcy filing, an automatic stay will halt the foreclosure process. This buys you enough time to figure things out, such as a solution for catching up on past mortgage payments so you can stay in your home.
If you’re struggling to make your mortgage payments, consider a short sale. It’s not the right solution for everyone, but it never hurts to learn more.