Short sale for homeowners can be a boon or a bane, depending on how they're used.If you’ve researched short sales in Southern Maryland, you could be asking yourself if it’s the right option for you. Short sales are increasingly becoming an option for homeowners to escape foreclosure and pay off their debts, but you need to know if it’s really that much better than foreclosure. Here we’re going to go over the benefits of a short sale, how it can help you avoid damage to your credit, and the draw backs. Let’s get started!
What is a Short Sale?
A short sale, in essence, is a debt negotiation. You’ll be able to settle liens and debt against your home, and in some cases you’ll be able to save your credit and even buy a new home in Southern Maryland right away. It’s called a short sale because the proceeds from the sale of the home will fall short of the debt amount, but many creditors would rather avoid the expense of a foreclosure. Here are some of the many benefits of choosing a short sale for your Southern Maryland home:
A Short Sale Can Help You Pay Down Your Debts
You shouldn’t have to live with the stigma of not being able to settle your debts; with a short sale you can cover your debts with the sale of your home, and you may even be released from debts without being paid in full. You’ll need to examine the contract and work to make sure the short sale offer works in your favor.
With A Short Sale, You'll Have No More Mortgage Payments to Make
One of the best benefits of a short sale is that you won’t have to make any more mortgage payments; you can keep paying down your debt if you choose to, but often times you’ll be able to get released from your debts, depending on the agreement between you and the lenders.
Short Sales Can Help You Keep Your Credit
While bad credit will remain on your file for seven years after a short sale, you will be able to buy a new home in 2 years under the Fannie Mae rules. In some cases you may be able to buy a home right after the sale of your current home! Avoiding a foreclosure on your record will save you from having to wait the 5-7 years that many have to wait to buy a new home under the Fannie Mae guidelines.
While a short sale can be a great way to avoid foreclosure, it does have its own problems; you may not be able to find a bank that will accept your short sale offer, the bad credit will remain on your credit report for 7 years after the sale and your personal finances will be heavily scrutinized. Before you begin the process to settle your debts with a short sale, you should consult a HUD approved mortgage counselor to make sure it’s the right choice for your situation!