For homeowners who are unable to keep up with their mortgage payments, there are only a few options available. If you are in this position, you may have been told that a “short sale” could work for you. Before diving in, make sure that you fully understand what a short sale entails and what it means for you in the short term and for the long-term.

A short sale offers you the opportunity to avoid foreclosure by selling your home for less that the amount that you owe on your mortgage.  In order to pursue a short sale, you need to get approval from your mortgage company, as selling your home in this way means that you will take all of the proceeds of the sale and use it to pay off as much of the amount that you owe them as the sale provides. Not every mortgage company is willing to accept these terms, and they may require you to put in additional money of your own to make up for the shortfall.

Though a short sale may seem like a poor solution to your financial situation, it does provide some benefits. A short sale is a viable alternative for those who are unable to arrange for a modification of their mortgage terms and who are not eligible to refinance at a more attractive interest rate. Whether your situation is simply that you have fallen so far behind on your mortgage payments that it will be impossible to catch up, or that you are facing some kind of personal situation that is not likely to fix itself anytime soon, finding yourself unable to make the payments you owe and unable to sell your house for enough money to cover your mortgage leaves you with few options, and a short sale is one that you need to consider.

If you are considering a short sale, there are a few things you need to keep in mind. The process involves a significant amount of paperwork and documentation, as well as having to send your lender a letter confirming that you are going through financial hardships that will mean you can’t keep paying your mortgage. If the bank approves, you’ll get the advantage of being able to escape your situation without taking a hit on your credit score, plus in a short sale, the buyer assumes all of the fees. The disadvantages include the fact that you will be walking away from a significant investment with no cash in hand and that you are completely at the mercy of your lender for greenlighting the transaction.

For more information on pursuing a short sale, contact our experienced attorneys to set up a time to discuss your situation.