Understanding The Benefit Of A Short Sale

If you owe more on your home than the current value of your property in Maine, you may want to negotiate with your mortgage lender about pursuing a short sale. You would need to work with a real estate agent who has extensive experience in short sales for the best results.

Short sales are complex and not always subject to approval by mortgage lenders. Generally, lenders require that the property must be on the market for sale. You will also need to demonstrate to your lender that you are experiencing a financial hardship.

Defining Hardship

If you have had any type of change in your financial status from the date you purchased your home and when you entered into a short sale negotiation, this could be classified as a “hardship.”

Lenders may find consider these types of changes as acceptable hardships:

• Mortgage payment increase due to an adjustable-rate mortgage (ARM)
• Job loss
• Employment relocation
• Severe accident injury
• Death of a close family member
• Divorce
• Military duty
• Excessive debt

There are other hardships that may qualify for pursuing a short sale of your property to avoid foreclosure. Speaking with an experienced attorney as soon as possible can make a significant difference in managing your debt and stress level. I am J. Scott Logan, and for more than 15 years, I have been helping my clients successfully implement options for avoiding foreclosure and other debt relief measures.

Frequently Asked Questions About Short Sales

Most people are unfamiliar with short sales, so it is natural to have questions. Here are some answers that may help:

What is the difference between a short sale and a foreclosure?

A short sale occurs when a homeowner sells their property – with their lender’s consent – for less than what they owe on their mortgage. A foreclosure occurs when the homeowner defaults on their mortgage loan and the lender first reclaims the property and then sells it to try to satisfy the debt.

There are many key differences between the two processes. In a short sale, the homeowner works with the lender and a real estate agent to sell the house. They usually stay in the home until the process is complete, so they have more control over their situation. In a foreclosure, the homeowner is usually forced to vacate the home before the sale, and they have very little control over what happens to the home. Finally, a foreclosure tends to have a more serious impact on a homeowner’s credit score and ability to finance a home in the future than a short sale.

It is important to speak to an experienced attorney to learn about your options if you are no longer able to afford your mortgage.

How does a short sale impact my credit score?

How much a short sale will impact your credit score can depend on whether you have missed any payments on your mortgage prior to the sale and if there is a deficiency balance once the sale is complete. Furthermore, a short sale can remain on a credit report for up to seven years.

In contrast, a short sale can do less harm to your credit score than a foreclosure. A foreclosure could impact your credit score by more than 200 points.

There are ways to build your credit score back up after a short sale, such as opening new credit card accounts, paying down debts and making regular credit card payments. An attorney to discuss the possible impact a short sale can have on your credit report.

How much will I owe my lender after a short sale?

A short sale could allow you to sell a home for a lesser price than its value to resolve debt. However, a lender may not forgive the remaining balance after a home is sold, leading to a deficiency balance. How much you owe your lender after a short sale may depend on whether or not a lender waives the deficiency. An attorney is often instrumental in negotiating this part of a short sale agreement.

Contact An Experienced Attorney For Help

For a more personally tailored evaluation of your options including these and others not discussed here, call me at the Law Office of J. Scott Logan, LLC, in Yarmouth at 207-613-8590 for a free initial consultation.