Short Sale Basics for Homeowners
A short sale occurs when a bank agrees to accept a payoff that is less than the mortgage balance. For example, if a homeowner has a defaulted mortgage loan with Wells Fargo in the amount of $200,000, but the property is only worth $160,000, Wells Fargo may allow the homeowner to sell their property to a qualified buyer for the current value of the property and, in some cases, forgive the amount on the unpaid balance.
Homeowners can benefit from completing a short sale in the following ways:
- Be completely freed from an unsustainable mortgage payment
- Rebuild credit more quickly
- Qualify for a new mortgage sooner
- Avoid foreclosure
- Tax exemptions (consult tax attorney)
Short Sale Facts and Figures
- Homeowners who go through foreclosure must attain a 680 credit score, make a 20% down payment, and wait five years in order to qualify for a new home loan. Homeowners who go through a short sale need only wait two years and do not have to attain a minimum credit rating or minimum down payment (Fannie Mae)
- Banks stand to lose as much as 30-60 percent of the outstanding loan balance on foreclosed homes (Mortgage Bankers Association)
- In the state of Washington, short sales outnumber the bank-owned properties nearly two to one (Better Properties Real Estate)
- Only one third of bank foreclosures are listed with a Realtor in the state of California (Foreclosure News Report)
Is a Short Sale the best option for your situation? Complete the Homeowner Course of Action Evaluation to find out instantly!
