Avoiding foreclosure is one of the hardest things to do as a homeowner. When you know that the money to take care of your home is no longer there, it can really stress you out. It’s better to make sure that you will be able to not only get out from under the house, but you will also be able to do it without damaging your credit. Think that it’s impossible?
Not so — not when you have the short sale process to fall back on. This is actually when the lender decides to accept less than what’s due for the house in question. Keep in mind that this option really isn’t universal; indeed, the lender has to make sure that the property actually qualifies for the short sale in the first place. The home’s market value must be proven to be less than what it would normally be, and the mortgage has to be close to default status — if not already in default status. That’s something that you have to pay attention to when you’re trying to really get your mortgage issues taken care of. In addition, you really need to make sure that you can actually claim hardships — just wanting to get out of your house isn’t enough to qualify for hardship or a short sale.
What happens next in a short sale is simple. The seller (you) has to sign a listing agreement with a real estate agent. It’s got to also have third-party approval, which means your lender need sot sign off on it. Once everything is underway, the agent will go out and try to find a buyer that can make an offer for less than the amount of the mortgage.
Now, in a perfect world — the purchase offer meets the terms of the short sale just fine. The lender has to accept the offer — it’s not just about whether or not you accept the terms of the buyer’s purchase offer. Once the buyer delivers the funds and the lender releases the lien, the seller delivers the deed, and everyone emends up happy — to a point.
There are still some consequences to the seller that goes through a short sale. The lender can have the forgiven debt go down as a taxable event, since it’s technically income. However, if you find that you really can’t take care of your mortgage anymore, a short sale could be just what you need!