How to Stop Foreclosure with a Short Sale

You made some smart decisions on prioritizing your spending and saved enough money for the realization of your dream of homeownership. Your mortgage broker managed to work out a suitable loan that suits your budget. You sign the papers and get settled into a home that you wished to be your permanent address. But then an inconceivable event occurs in the form of losing your job, or your house needs to be sold for whatever reason.

In this case, because your house is worth less than your mortgage, a foreclosure may not be the only way to deal with the problem. There is a last-ditch move for those left with a few remaining financial options, called a real estate short sale that can salvage your credit and help you prevent bankruptcy.

A short sale occurs when a homeowner sells his or her property in financial distress for an amount less than due on the mortgage. There is a third party involved in buying the property, but the third party cannot be the bank, and all proceeds from the sale go to the lender. The lender either gets a deficiency judgment against the borrower or forgives the difference requiring the borrower to pay all or some part of the difference between the sale price and the original mortgage value, to the lender.

In some states, this difference is legally required to be forgiven in case of a short sale. A short sale proves to a very beneficial alternative to foreclosure because it prevents you from having to go through the eviction and foreclosure. A short sale will definitely smudge your credit report but it turns out to be less traumatic to your credit than a foreclosure. So, you can convince the lender to stop the foreclosure by short sale as it is in the best interest of the lender too.

In a foreclosure, the property is foreclosed when a borrower repeatedly fails to pay the mortgage dues. In the legal process of foreclosure, the lender assumes ownership of the property and evicts the borrower. The properties that have been foreclosed can be sold at an auction, or through the help of traditional real estate agents. A foreclosure is really a bad idea for the borrowers because it fairly damages their credit score. You should stop foreclosure with a short sale because it reduces the extra fees and additional costs for both the creditor and borrower. The process of short sale usually involves a lot of paperwork for all parties, but it really helps to reduce the negative impact taken by the borrower’s credit score.

A short sale is not always preferred by the lenders, and even if they’re willing, sometimes the deal doesn’t always close. In most of the cases, the lender only agrees to stop foreclosure with a short sale when the borrowers owe more than their property’s current worth on the market, and can be utilized both in situations when the homeowner have fallen behind or when they’re current on their mortgage payments. However, approval by the lender is required before a short sale is completed and the lender is not obligated to accept a short sale.

There are many excellent alternatives to a foreclosure and are worth trying to save your money. You will be able to get back on your feet much faster without the stains of foreclosure and bankruptcy on your credit report. Contact us for fast free help today.

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