Perhaps you’re nearing a foreclosure situation, and you don’t think that you can avoid this coming financial catastrophe. One of the procedures that’s become popular and has been getting support from the likes of Freddie Mac and Fannie Mae is the short sale. In case this is a new term for you, the RealtyTimes defines a short sale as when:
“home owners who can’t afford their mortgages sell their houses at substantial discounts, often below what they owe on the loan.”
A short sale can also be called a pre-foreclosure sale. It’s a financial procedure that in uncertain financial times can be the best case scenario for most of the parties involved. A buyer can end up getting a bargain deal. A real estate agent gets a commission. The lender gets some of the money that they’re owed, and they don’t get buried under the costs of the foreclosure proceedings. The seller can control some of the monetary deficiency on the loan and prevent having a foreclosure recorded on his or her credit report (although a short sale usually has a negative effect on your credit score). According to Freddie Mac, the seller also “may avoid reporting of discharged debt to the IRS.”
A short sale situation is probably not the position that you wanted to be in, but it can potentially save you from the bigger calamity of a full foreclosure.
Tags: Credit, credit score, lender, mortgage, pre-foreclosure, preforeclosure, protect your credit, real estate agent, seller, short sale