Many individuals want to become homeowners at some point in their lives. It is one of the most common goals. Some of them succeed, while others don’t. It depends on their income and financial ability. A part of them can afford to purchase a house with the money they saved up for a long time. The rest chooses to take out a loan to buy a property, and pay it off later.
However, you never know what the future will bring. Your income could decrease, or you could lose your job. Unfortunately, it will lead to financial issues, and therefore, troubles paying off the loan. When this happens, you don’t have much of choice. You can pick between a short sale and a foreclosure. People usually choose the first option because it is more beneficial in comparison to the second alternative.
If you have no idea what is a short sale, continue reading. It is a situation when a lender agrees to sell the troubled property for less amount than what you owe to lower additional expenses and fees to both you and the bank. Thanks to this solution, you can solve the issue without having to go through foreclosure.
If you want to choose this alternative, you need to meet certain requirements. For example, your home needs to be less or equal to the worth of your debt. Also, you need to provide some evidence of financial trouble. As proof, you can use the decrease in income, being jobless, going through a divorce, any medical condition, or a property problem.
Advantages of choosing a short sale
The primary benefit is that you will have the opportunity to stay in your home longer than you would with foreclosure. The amount of time varies, depending on the state you are in. However, it usually ranges from one to six months. It is influenced by how long it will take you to find a buyer, and the bank to approve the transaction.
The second advantage is that you will have complete control over the sales process. If you go through a foreclosure, they will evict you from your home. Also, you won’t have an influence on the timing of you having to get out of your property. If you have control over the process, you can stay in your house longer.
The third benefit is that your credit score will suffer less than with a foreclosure. The reduction can go anywhere from 100 to 150 points with a short sale. It depends on your unique situation, financial problems, late payments, and your credit rating before the start of this process. When it comes to foreclosure, your score will take a hit of between 200 and 300 points. As you can see, it is no wonder many individuals prefer to avoid the second option. If you want to know more about the whole process, contact a certified short sale specialist. Find out everything there is to know before making a final decision.