A short sale is not an unfamiliar term in the real estate business and many homeowners resort to this process for a variety of personal reasons. But what exactly is a short sale? A short sale is the process of when a homeowner sells his/her home for an amount that is less than the balance they owe the lender. The proceeds from the short sale will then be used to pay for a fraction of the balance. This is what many homeowners resort to when they really need to sell the property but owe more than what the property is currently worth.
Short sale is a usual term homeowners and realtors deal with. However, as familiar as the term 'short sale' is, there are still a few myths about the process that make it appear more complex to homeowners than it already is. Here are some of the wrong notions about the process and why they are wrong:
1. A short sale's damage onto one's credit score is just the same as foreclosure's.
In most cases, a short sale won't be as damaging to one's credit record as a foreclosure. Resorting to a short sale could actually imply that you acted in a responsible way, and opting for a foreclosure could imply that you're walking away.
Although in a short sale you'll be paying less than your outstanding balance, the loan was still settled with the mortgage provider. Foreclosures on the other hand, are often viewed as a homeowner's lack of sense of responsibility.
2. Only people with delayed payments can qualify for a short sale.
Although this may have been true in the past, this is no longer the case now. Right now, if you want to opt for a short sale, you just need to prove your financial hardship. This can be due to unemployment, divorce, increase in mortgage rates, and the likes.
3. You need to wait for 5-7 years to buy again after a short sale.
This could be true with most lenders, but there are also situations where the waiting period could be reduced. However, it is still wisest to speak with a mortgage expert to know your options. Real estate professionals are the best people to tell you what your current options are, and they are the ones who know which lender offers the programs that would work for you.
