When buying a home, you may see some entries identified as being a short sale. A short sale occurs when an individual has to sell his real estate for less than what is owed on the mortgage. For example, if Sam took out a $ 400,000 mortgage on a house and still owes $ 350,000 but can only sell the house for $ 300,000, this transaction would be considered a short sale. , the income from the sale of the house will go directly to the repayment of the debts of the house. This implies accepting less than the expected amount, which means that you, or more specifically your lender, will lose money. payday loan debt consolidation is a good financial decision, it is your best option.
Why a short sale?
A short sale usually occurs when a homeowner is desperate to sell his house because he can no longer make payments on it and the value of the house ends up being less than the mortgage due.
- The owner has more than one mortgage and can not make payments from both
- The landlord simply can not make his current mortgage payments
- Owner wants to move and change the location
- The owner wants to avoid the seizure
Short sales usually occur when the property is about to be foreclosed. This means that the bank is threatening to take possession of the mortgaged property if the house is not sold.
Who benefits from a short sale?
The owner
Although a short sale does not seem favorable for the owner, his house is sold at a loss and therefore it will not benefit financially from his sale. There is, however, a major advantage for the owner; he will avoid the seizure. This is very beneficial because foreclosure negatively affects your credit rating.
Owner’s mortgage lender
Although the mortgage lender encounters a loss, short sales allow the lender to avoid foreclosure of the property, all the headaches that come with it and can resell the home.
The buyer
A buyer can benefit from a short sale because he may be able to get the house for a fair and reasonable price from the market. Short sales can vary depending on the house, how it was maintained, and even the lender. Thus, short sales can be beneficial to the buyer depending on the circumstances of the house and the real estate market.
All other parties
All agents involved, including the buyer’s agents, registration agents, appraisers, mortgage brokers, and the insurance company should benefit in one way or another from a short sale.
How is a short sale?
During the debate whether or not you want to sell your house short, stop arguing and talk to your lender. The landlord must receive permission from the lender (bank or investors) to sell his property for less than the amount of mortgage that is still owed. The lender will receive much less than what the house is worth. It is therefore up to the lender to determine whether or not the homeowner can continue to make payments or decide whether a short sale is preferable to foreclosure. In addition, it can take a few weeks or even months for the lender to evaluate the house. That’s why we suggest you talk to your lender as soon as possible. You can also cancel the short sale agreement; So do not worry if your financial situation changes and you decide not to sell the house.
Hoping to avoid foreclosure, or just get rid of a property that pulls you down, short sales are not always as bad as people think. Yes, you will receive less than the value of your mortgage, but this is significantly better than entering your property and damaging your credit rating.