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What are Some Things to be Wary of in a Short Sale?
Many homeowners are proceeding with short sales rather than foreclosure when they cannot get a loan modification or meet their obligations to their lender.
In March of 2012 short sales represented more than 14 percent of existing home sales, compared with about 10 percent in 2010. While the number of short sales is rising, foreclosures are falling and represented 25.3 percent of home sales in March of 2012, compared with 42.7 percent in all of 2010.
Some important factors to be aware of if you are considering going the short sale route:
- Your credit rating will be affected. While your credit may not be as adversely affected as in a foreclosure, it is still significantly affected by a short sale. When a homeowner fails to repay a mortgage, all sorts of red flags go up for future lenders. Your credit score drop, but by how much depends on a number of circumstances such as how many payments you have already missed.
- Your lender may still come after you for the balance you owe. Unless you have a formal written agreement with your bank, your lender can come after you for the amount that is still outstanding on your mortgage.
- Your lender may not agree to the short sale if you get too far behind in mortgage payments. The more behind you are, the more difficult it is for your lender agree to a short sale. Foreclosure becomes more attractive to your lender if you delay.
Seek out the guidance of a skilled real estate attorney for answers to your short sale questions.