Top 10 Reasons to Short Sale Your Home

If you are facing a foreclosure on your home, there are many avenues of help available to you. You can try to get a loan modification from your bank, but if this is not available to you, you may want to consider a short sale. While you may lose money, you will not have to go through the foreclosure process, and there are many other reasons why this may be the best option for a home owner in this situation.

A short sale means that the proceeds of the sale are less than the actual amount owed on the home. This alternative is used by home owners that owe more than their homes are worth. If you have owned your home for several years, chances are you will lose money on the deal, but it may be better than going through a foreclosure. Let’s take a look at ten reasons why a short sale may be the best option available to you.

Saves Your Credit

A foreclosure will stay on your credit report for a period of seven to ten years, making it nearly impossible to get a loan, a new credit card, and certainly a new house. A foreclosure can drop your credit score by nearly 300 points, especially if you have late payments already.

 

Saves Face

No one wants to admit that they couldn’t afford to keep their home. By doing a short sale, you can be spared this embarrassment.

 

Keeps Your Banking Reputation Intact

Whether you’ve dealt with your bank for several years, or you are a new customer, no one wants to go through a foreclosure. It can make it difficult to keep a checking account, as well as your bank credit cards. With a short sale, your bank will have no reason to take recourse against you.

 

Buy a Home Quicker

Instead of having to wait seven to ten years to purchase a home after a foreclosure, with a short sale, you can begin the process again in as little as two years and sometimes much quicker. This gives you time to get back on track and reduces the amount of money you may be putting toward rent when you could own another home.

 

Get a Federal Loan

In some cases, you may be able to purchase a new home right away, even after a short sale. For example, Fannie Mae, a federal lender, may offer a new home loan right away to buyers with a short sale on their credit, as long as you don’t have any 60 day late payments on your credit report, which may be tough to avoid with a short sale.

 

Tax Benefits

In order to help home owners, the IRS is offering help for those who decided to go with a short sale rather than a foreclosure. You may not have to pay tax on the forgiven amount of the sale, which may essentially save you thousands of dollars.

 

Getting Rid of Stress

Having a home foreclosed on is incredibly stressful. A short sale can help you get through the process in a shorter period of time while reducing the emotional and mental stress involved.

 

Frees up Equity

Even though you may lose some money in the deal, you won’t be saddled with a home where you owe more than the house is actually worth.

 

Better Record

Some employers look at a foreclosure as a sign that you are not dependable. As more employers rely on credit reports for hiring practices, it is best to do all you can to avoid a foreclosure.

 

Better Interest Rates on Loans

Having a low credit score means that if you can get a loan in the future, you will have to pay premium interest rates. By avoiding a foreclosure, you are in a much better position at securing lower rates on loans in the future.

These are just a few of the benefits that a short sale can offer a home owner. If you are having trouble making payments, this may be your answer.