A homeowner who needs to sell a home for less than they owe may need to use a short sale to make it happen. This is an option for some homeowners who are having trouble keeping up with their mortgage payments but the property value is below the balance of that mortgage.
One important thing to remember about a short sale is that the lender must agree to the sale because they’ll have to take a financial loss. While this can be a beneficial option for struggling homeowners, there are challenges to consider.
The impact on the seller
A short sale can often help a homeowner avoid foreclosure, which can have a more severe impact on the person’s credit score than a short sale. In both cases, it’s likely that the homeowner’s credit score will drop. This could make it harder to obtain a new home loan or line of credit in the future.
The short sale process can also be lengthy and complex. It requires the homeowner to work closely with the lender to negotiate the terms, and approvals can take time. This can add stress to an already challenging situation because the homeowner must continue to manage the property and deal with potential buyers while waiting for lender approval.
There are potential tax consequences to consider, so that must be factored into the decision the homeowner makes. The homeowner should be sure they understand exactly what the short sale means.
