Mortgage Short Sales save homeowners and help stop foreclosure

For homeowners about to lose their homes because of an upside down mortgage, injury or loss of income, anything that will help them stop foreclosure on their home is appealing. One of the best alternatives for these homeowners is to choose to put up their home for a mortgage short sale.

The reason homeowners find putting up their home for a short sale, which would make them sell their home for a smaller amount than they owe on it, getting no profit from the sale, is because if they were to get their home foreclosed on them, they would receive a bad mark on their credit, lowering their rating for seven years. This could make it difficult for them to find a place to live or work, since some renters and even employers check credit ratings and see them as a sign of trustworthiness and competence. Plus, there is the embarrassing process of having one's home on the public auction block. However, a short sale may also have a negative impact on your credit rating, but its impact is less than a foreclosure.

Many home lenders prefer to accept a short sale than to foreclose on a home because they would have to pay holding costs, taxes on the foreclosed home as well as the other properties in their possession. A short sale means the lender takes a small cut in the sale of a home, which would save the lenders the money and hassle involved in foreclosing. So when homeowners decide to put their home up for short sale, they have to be aware that while it will stop foreclosure, the process may take months longer than conventional home sales.

A short sale is very risky, and won't be accepted by the lender without proof that the market drop has created a situation wherein the homeowner will absolutely not be able to sell the home for what they owe.