The threat of foreclosure is a scary thing for sellers. Many are so overwhelmed with financial burdens that they are not sure where to begin. If you are under the threat of foreclosure, a viable option may be placing a short sale.
A short sale is the sale of real estate property in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than a complete loss. Both parties consent to the short sale process, because it allows them to avoid foreclosure.
Real Estate expert, Gwen Moran, has some great Facts on short sales:
- Short sales are able to receive government incentives. "Although short sales are not hassle-free, at least you've got the government backing you." Gwen Moran states. The Home Affordable Foreclosure Alternatives (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales or deeds in lieu of foreclosures. The HAFA program is for homeowners who can't keep their homes with the help of a loan modification.
- You can be a homeowner again more quickly with a short sale in your past than with a foreclosure. New Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to up to seven years after a foreclosure.
- You can receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.
As always, you should weigh your options when considering a short sale. Short sales are not necessarily easy to negotiate or navigate, however they can be a great alternative to foreclosure. If you have any questions, do not hesitate to give me call!
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