What is a short sale?

What is a short sale?

Is a short sale right for me?

What are the alternatives
to a short sale?

Why do banks allow
short sales?

How late is too late for a
short sale?

How is my credit impacted
by a short sale?

How much does a
short sale cost?

What problems may
occur with a short sale?

How did this housing
crisis happen?

What are the tax
implications of a short sale?

What is the Mortgage Forgiveness
Debt Relief Act of 2007?

Who can help me with my
short sale?

Definition

A Short Sale is the sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan resulting in the lender forgiving debt in order to avoid foreclosure.

	A Short Sale is...	A Short Sale is NOT...
	An alternative to a foreclosure Free for the homeowner An agreement with the bank to forgive debt	A permanent mark on your credit A short or quick real estate transaction Another form of foreclosure

If the bank agrees to a short sale, they are agreeing to accept less than full payment for the loan that you owe. For example, let's say that you owe $500,000 on your mortgage, you can only sell your house for $400,000. You're basically giving the bank everything you get for your house, and the bank will forgives your remaining debt on the property.

Short Sale Approvals without Recourse Language

The ultimate goal when short selling your home is to get an approval letter from the bank that is free of recourse language. This would ensure that the debt is forgiven and the bank cannot come back at a later time to claim the remaining balance on the debt. In other words, we want to make sure that when the debt is forgiven, there is no chance for the lender to come back and seek recourse against the homeowner at a later time for not paying their debt.

A Short Sale is NOT a Foreclosure. Short sales present fewer long-term repercussions as opposed to a Foreclosure.

Credit Impact Comparison
Short Sale	Foreclosure
Credit Score can recover in 2 - 3 years Can buy next home in 2 - 3 years No permanent mark on credit report	Credit Score can recover in 7-10 years Can buy next home in 5-10 years Permanent poor credit reputation. Individuals are required to disclose foreclosure when applying for some jobs, trying for another loan or applying for credit cards

If a seller finds themselves in a position where they can no longer afford their mortgage payments, if their mortgage is about to adjust, if they are putting everything on their credit cards and the payments are skyrocketing - it may be time to consider a short sale, rather than potentially facing foreclosure and it's damaging, long-term effects.