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What are the benefits and process of a short sale when selling a home, and how does it impact my credit score?
A short sale is a transaction in which a homeowner sells their property for less than the amount they owe on the mortgage, which requires the lender's approval.
According to the Consumer Financial Protection Bureau, "A short sale is an alternative to foreclosure but because it is a sale, you will have to leave your home."
Short sales are often a last resort for homeowners who are facing financial distress and are unable to pay their mortgage, and are also common in markets where home values have decreased.
The process of completing a short sale typically involves several steps, including listing the property, obtaining a buyer, and getting the lender's approval for the sale.
After the sale is complete, the lender may forgive the remaining balance or pursue a deficiency judgment, in which the original borrower is required to pay the remaining amount.
Short sales can be a complex process, and it's advisable for both buyers and sellers to seek the guidance of a real estate professional or attorney.
Unlike a foreclosure, which can stay on a credit report for up to seven years, a short sale can stay on a credit report for up to seven years, but may not have the same long-term impact.
According to Rocket Mortgage, "A short sale occurs when a homeowner in dire financial trouble sells their home for less than they owe on the mortgage."
The lender will have to approve a buyer's offer, but otherwise, the short-sale process is similar to a traditional home sale.
According to NerdWallet, "A short sale in real estate is the sale of a home at a lower price than what's owed on the mortgage."
The time it takes to sell a home through a short sale can be longer than a traditional sale, with the average time taking around 3-6 months.
Short sales can be a more appealing option for homeowners who are facing financial distress, as they do not require multiple negotiations with lenders and could potentially reduce the impact on credit scores.
Short sales can also provide relief for homeowners who are underwater, meaning they owe more on their mortgage than their home is worth.
According to Bankrate, "A short sale is when a mortgage lender agrees to allow a homeowner to sell their home for less than what they owe on the mortgage."
Real Estate Short Sales are any sales of real estate that generate proceeds that are less than the amount owed on the property.
Short sales can be more costly than foreclosures, as they typically involve real estate agent fees and closing costs.
According to Investopedia, "A real estate short sale is any sale of real estate that generates proceeds that are less than the amount owed on the property."
Homeowners can also consider a "deed-in-lieu" or "walk away" from the property, where they surrender the property to the lender in exchange for forgiveness of the mortgage.
Some real estate professionals argue that short sales can be more effective than foreclosures because they provide a clear title and can avoid protracted legal battles.
However, others argue that short sales can lead to less damage to the credit score, but the impact will still be significant.
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