If you're facing financial difficulties and can no longer afford to make your mortgage payments, you may be considering short selling your home. Short selling can be a viable option for homeowners who owe more on their mortgage than their home is worth, as it allows them to sell their home for less than what they owe on their loan. In this blog post, we'll explain what short selling is, how it works, and what you need to know before you decide to go down this path.
What is Short Selling?
Short selling is a process where a homeowner sells their home for less than the amount owed on their mortgage. The goal of short selling is to avoid foreclosure, which can have a devastating impact on a homeowner's credit score and financial future. In a short sale, the lender agrees to accept less than the full amount owed on the mortgage, and the homeowner is released from their obligation to pay the remaining balance.
How Does Short Selling Work?
Short selling involves several steps, including finding a real estate agent who specializes in short sales, listing your home for sale, and negotiating with your lender to accept less than the full amount owed on your mortgage. Here's a brief overview of the process:
1. Find a Real Estate Agent: Short selling your home is a complex process that requires the expertise of a real estate agent who specializes in short sales. Look for an agent who has experience with short sales and can guide you through the process.
2. List Your Home for Sale: Once you've found a real estate agent, they will help you list your home for sale. Your agent will work with you to determine the best price for your home and create a marketing plan to attract potential buyers.
3. Negotiate with Your Lender: After you receive an offer on your home, your lender will need to approve the sale. Your agent will work with your lender to negotiate a short sale agreement, which will outline the terms of the sale and the amount the lender is willing to accept.
4. Close the Sale: Once your lender approves the short sale agreement, you can close the sale and move on from your mortgage obligation.
What You Need to Know Before Short Selling Your Home
Short selling your home can be a viable option for homeowners who are struggling to make their mortgage payments. However, there are several important things you should consider before deciding to go down this path:
1. Short Selling Will Impact Your Credit Score: While short selling your home can help you avoid foreclosure, it will still have a negative impact on your credit score. You can expect your credit score to drop by 100-200 points, which can make it difficult to obtain credit in the future.
2. Short Selling Can Take Time: Short selling your home can take several months, and there's no guarantee that your lender will approve the sale. It's important to be patient and work closely with your real estate agent and lender to ensure a successful outcome.
3. You May Still Owe Money After the Sale: In some cases, your lender may require you to pay back a portion of the remaining balance on your mortgage after the sale. It's important to read and understand the terms of your short sale agreement to avoid any surprises after the sale.
4. Short Selling May Not Be Your Only Option: Before deciding to short sell your home, consider other options such as loan
Guest and Tanner Real Estate
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