In today's economy, many homeowners are struggling to make their mortgage payments each month.  Many are on the brink of foreclosure and are considering walking away from their homes, especially if they now owe more than the property is worth.  Another option for struggling homeowners is the short sale, a method of selling the home for less than what is owed on it.  Banks may agree to this if they decide taking a moderate loss on the home sale is a better option than trying to press current homeowners, who may end up in foreclosure anyway.  If a homeowner meets certain requirements, they may be eligible for a short sale.

 Deciding if a short sale is better option than foreclosure involves taking several factors into consideration.  During a short sale, the homeowner is in control over who purchases your home.  It may help you accept the fact that you are selling your home to know that you have control instead of the bank.  The sale of your home and property are handled just like any other standard property sale.  You do not have to be behind in your payments to qualify for a short sale, so choosing to pursue one helps you maintain a good credit score.

 While allowing the home to fall into foreclosure is simpler in the short term, essentially freeing you of the responsibility of selling the property, it can damage your credit significantly.  You will likely be unable to purchase another home or piece of property for at least five years or, more often, seven years.  Effecting a short sale saves you this damage.  In fact, if you have never been more than thirty days behind on your mortgage payments, you can technically purchase another home immediately.  Qualifying for another home loan in this scenario is difficult, but possible.  You may even qualify for an FHA loan.

 If you're struggling to escape a high mortgage payment, the easy answer may seem to be foreclosure.  But the damage done to your credit when entering foreclosure is severe, and can be hard to escape.  Utilizing a short sale avoids this stigma.  In nearly every instance, choosing the option of a short sale is a better option for a homeowner.  If you qualify for a short sale, be sure to review all the terms associated with it and compare them to the specifics related to foreclosure.  You'll most likely come to the conclusion that a short sale is the proper course of action.

In effect since Jan 1 2011 

SB 458 extends the protections of SB 931 (2010) that have been in effect since Jan 1 2011, to ensure that any lender that agrees to a short sale for a residential 1 to 4 property, must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans. This applies to 2nd mortgage liens, 3rd mortgage liens, etc. (a.k.a. junior lien holders; e.g. home equity line of credit – HELOC).

If you want to Stop The Bank’s Foreclosure Today!    A Loan Modification could be an alternative.

Save your home from foreclosure. The Silicon Valley Real Estate Team is here to help homeowners understand foreclosure alternatives and avoid foreclosure. Free consultation for home owners in financial hardship.