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Should you consider a short sale for your home?

On Behalf of | Apr 11, 2022 | Real Estate Law

Selling a home in the current real estate climate can be challenging. While this is true, you do have options.

One option is a short sale. However, because of some of the short sale terms, it’s important to learn more about it to determine if it is the right option for you.

What is a short sale?

Short sales are used as a type of pre-foreclosure solution for most people. You sell your home for less than what you still owe on your mortgage with a short sale.

To choose this selling option, you must get approval from your lender. If they agree to a short sale, the money for the purchase goes toward the balance on your mortgage, and (in some cases) the remainder of the balance is forgiven. This can vary based on your situation, and the specific terms are outlined in the paperwork you sign with your lender.

When should you consider a short sale?

There are a few situations when you should consider a short sale. These include:

  • There’s no option to modify or refinance your existing mortgage
  • You have lost your job or face some type of financial hardship that won’t be resolved quickly
  • You own more than your home’s appraised value
  • You tried to sell your home for more than what you owe, unsuccessfully

Are there consequences to a short sale?

It’s worth noting that while a short sale can help you sell your property faster and get you out of the financial hardships you are facing, there could be some consequences. For example, there could be tax implications, and there are situations where the remainder of your mortgage will not be forgiven. Because of this, it’s important to consider your options and review the short sale terms before deciding.