Short Sale or the Solution to Foreclosure

With the dwindling economy and the slowing housing markets, people across the country are trying to find ways to sell their homes and keep themselves out of the bankruptcy and foreclosure categories. One solution is the short sale of real estate. A short sale is when the owner of a house can no longer afford her or his mortgage payments, and therefore, decides to ask their lender for a discount on the loan to sell the property. Ordinarily, this kind of situation is favorable to both the property lender and the property owner. The property lender does not have to spend money and time on the foreclosure process, and the property seller has the opportunity to avoid foreclosure and bankruptcy.

There are three particular requirements that one should probably meet in order to consider a short sale on their home. Firstly, the amount of the loan on the property should be more than what the property is actually worth. Secondly, the property seller should de unable to pay for the monthly mortgage payments and has not paid these monthly mortgage payments in quite some time. Thirdly, the property seller must be experiencing some sort of financial difficulties, such as divorce, death, medical situations and job loss.

The only party, however, to profit from a short sale is the property lender. In fact, the property lender has a title company to draw a document saying that the property lender will be the only party to receive any profits from the sale of the property. If a property lender is willing to come to a short sale agreement with the property seller, the property seller might be able to have a “pay off” record on their credit report, instead of a “foreclosure” note or “bankruptcy,” note. Even though a “pay off” record on your credit report is not the best situation to be in, it is better than having a “foreclosure” note or a “bankruptcy” note on the property seller’s credit report.