Short Sale – The Lesser of Two Evils

In today’s economic climate, many homeowners are facing the prospect of foreclosure.  Whether it’s due to the loss of a job or spouse, other life changes or financial mismanagement, the prospect of losing your Southern Maryland home is not an easy one.  Don’t despair.  When faced with this possibility, a short sale may be the lesser of two evils.

A foreclosure is a long, expensive process wherein the bank takes back ownership of your Southern Maryland home while you are left to pack up your belongings and leave.  In some cases, a move begins with a knock on the door by a Sheriff’s officer to oversee your hasty retreat.  Your credit gets hit hard (to the tune of 100-150 points), making it difficult to secure funding for any type of loan for anywhere from 7-10 years.  For many homeowners, this means that they will not be eligible to buy another home for approximately 5-7 years, since most home loan companies don’t like seeing that you walked away from your previous home loan.

A short sale, on the other hand, is quite different.  In a short sale, you or your representative (such as an experienced real estate professional) will contact the bank, explain the circumstances for which you are unable to continue paying your current mortgage and negotiate a deal to sell your Southern Maryland home for less than the amount owed.  There is no guarantee that the mortgage company will accept a short sale, though.  While a short sale can also hit your credit hard, it is significantly less than a foreclosure.  Most banks will report your mortgage loan as being paid in full for less than agreed (similar to a charge off).  However, if you keep your credit in good standing for the next two years, you could be eligible to purchase another home at that time.

Before you make a decision about whether to walk away from your Southern Maryland home or try sell it in a short sale, contact a professional financial advisor or foreclosure specialist about which option would work best for your situation.  In the case of a foreclosure and a short sale, the short sale is definitely the lesser of two evils.  This can be a difficult and stressful time no matter which way you go.  Try to remain calm and remember that this too shall pass.

Bonnie Augostino, your Southern Maryland real estate specialist

Originally posted on my Active Rain blog here: http://activerain.com/blogsview/2539976/short-sale-the-lesser-of-two-evils.