Will the bank approve my home for a short sell?
If you need to sell your home and you owe considerably more than the home is worth, you may consider a short sale. A short sale is where your lender agrees to accept market price on the home and ‘forgive’ all or a portion of the remaining loan balance.
Be sure you understand the intricacies of the short–sale process, which includes legal and financial risks.
Besides seeking an attorney’s and tax professional’s advice, work with an experienced Prudential Seaboard Properties Real Estate Agents on the transaction.
Remember, just because a lender may have agreed to the short sale that doesn’t mean you’re automatically released from your debt. Rules vary by state on whether the deficiency still is owed. Find this out before you close on the sale.
A short sale also may affect your taxes. If debt is forgiven, it’s considered a “relief of debt” and may be treated as income for tax purposes.
While you are making a good faith effort on your home, the lender may look more favorably on you, and perhaps be willing to help minimize any damage to your credit score. Yet, your credit score may still suffer. If it does, your ability to qualify for loans and credit in the future will be compromised.
If you choose to proceed with a short sale, treat your home like you would for any sale. Remove the clutter, fix the little things, and ensure your curb appeal is sharp. You’re most likely not going to spend big money on improvements, but you still need to attract as many buyers as you can. So, spruce it up!
And, realize that you may not walk away with any money from the deal. However, you will be spared the stress of a drawn–out foreclosure process and may be able to work with the lender on a future home purchase.