Facing foreclosure can feel like you’re on shaky ground, and it can get stressful to deal with it all. However, it’s important to remember that you do have options, like a short sale. This alternative to foreclosure can provide a lifeline when it feels like your home is slipping away.
But before you decide to go down that path, here are some important factors to consider.
Consider the impact on your credit score
A short sale can still impact your credit score. While it’s true that a short sale might not hit your credit score as hard as a foreclosure would, it can still cause a significant drop.
This is something to bear in mind, especially if you’re planning to purchase another home in the future or if you will be applying for credit. You will want to weigh this against the potential impact of a foreclosure on your credit.
Understand the potential for a deficiency judgment
While the lender may agree not to pursue you for the difference between the sale price and what you owe on the mortgage (the deficiency), this is not always the case. Some lenders may still have the right to pursue a deficiency judgment against you after the short sale.
This could leave you responsible for paying the remaining balance of your loan even after losing your home. Be sure to clarify this with your lender before agreeing to a short sale.
Check for other options or alternatives
A short sale is one route you can take when you’re up against the wall with your mortgage. But remember, it’s not the only path available to you. Other choices like loan modification, forbearance agreement or a deed in lieu of foreclosure might be a better fit for your situation.
It’s all about getting a clear picture of your options and understanding the ins and outs of each. Before you set your sights on a short sale, be sure you have turned over every stone and looked at all other possibilities.
Consider legal counsel
A short sale can be a viable alternative to foreclosure for some homeowners. However, there are the potential consequences and your own financial situation to consider before proceeding. If you’re considering a short sale, it can be beneficial to seek an attorney. An attorney can guide you through the process and help you make the best decision for your situation.