What Is A Short Sale?
A short sale is when a home owner sells his or her property for less than the amount owed on their mortgage. Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them.
Q: How will doing a short sale effect my Credit?
A: A short sale is highly preferable from a personal credit score point of view, Credit scoring firms take a dim view of a foreclosure and will issue a credit score much lower than when a home seller turns to a short sale instead. That not only protects the seller's score, it keeps them "in the game" and better able to buy another home down the road, without the burden of a significant foreclosure-induced credit score decline.
Q: What Costs will I Pay?
A: You pay nothing! With a traditional home sale, the seller bears the burden of fees and charges, including real estate agent commissions, which can be 3%-to-6% of the total home sale. In a short sale, those fees and commission are completely paid by the bank.
Q: Will I have to keep paying my mortgage?
A: Nope! The home-owner is able to stay in his or her home and save their money throughout the short-sale process.
Q: Will I be able to purchase a home again in the future?
A: Those who participate in a short sale can purchase in as little as two years, whereas those who have lost their home to foreclosure will likely be unable to purchase for 3-7 years.