Avoid Foreclosure With A Short Sale Or Deed
You may be having trouble paying your mortgage on time and are looking at foreclosure. To avoid it, you have a limited number of options. Selling your home through a short sale is one of your best options. Here is information about selling your home in order to avoid getting the foreclosure on your record.
How does a short sale work?
When you sell the house as a short sale, you have permission from the mortgage loan lender to sell the house for less than what you currently owe for the loan. You need to make sure you get permission beforehand, or you might be sued by the lender for selling for home for less than what you still owe. Many lenders want to help you avoid foreclosure, which is why they might be willing to do this for you. You may still need to pay back the deficiency, which is the amount of the loan not covered by selling the home, but it could still help you avoid the foreclosure.
What are the pros and cons of a short sale?
Aside from the fact that you avoid foreclosure, it can be beneficial by getting your home sold faster. If other homes in your area are going for higher than the amount you plan to sell for, you increase the chances of someone being interested in your home. Also, if you live in a state that doesn't allow lawsuits for deficiencies, you don't have to worry about the legal risk.
On the downside, you actually need to have an offer from a buyer before you can approach the lender. For each offer, you need to approve the short sale amount with your mortgage loan lender before you can proceed with selling the home. This can cause more work for you and a lot more waiting. It is also more difficult being approved for a short sale.
Can you get a short sale with multiple mortgages?
If you have a second or third mortgage on your home, you need to have the short sale approved by each of your lenders. This is rarely approved because you might need approval from three separate lenders. You would first put your home on the market as a short sale, then wait to get an offer. You will take that offer to each of the lenders and wait to be approved. If even one of them denies it, you will have to try to sell for a higher price or go through foreclosure.
If you are trying to avoid foreclosure, it can help to speak to a real estate law attorney first. They will help you with your different options and decide what is best for you.