Find Out If a Short Sale Is Right For You
The main disadvantage of a short sale is that it can take several months to complete the transaction, which may not work for people who need to move or want to get into a home quickly. Another issue is that a lender can change terms of a sale, which can be a deal killer. Finally, a short sale can affect your credit, but it is less damaging than foreclosure. Learn More About Short Sales.
Short Sale vs. Foreclosure: Understanding Your Best Option
Before you pursue a short sale, talk to a decision-maker at your lender and explain your financial hardship. Be prepared to provide documentation of the problem, including bank statements, medical bills, pay stubs and a termination notice from your employer or former job. Your lender will also want to review a comparative market analysis and broker price opinion, as well as your income and debt-to-income ratio. If you have a cosigned mortgage, that person will be required to sign documents for the short sale as well.
As a buyer, make sure you have enough cash for the down payment and closing costs. Conduct a title search to make sure the property is free of liens, and perform a thorough inspection to determine its condition. Lenders typically approve a short sale only after reviewing all of these details and concluding that it is in their best interest. They may also be willing to forgive outstanding debt and report the property as “paid in full” or “settled,” which can improve your credit.…