Though many people are not overly familiar with the term, "short selling" has been around for a long time. Basically, short selling one's home means they're willing to sell the home for less than what it's worth.
There are two main reasons someone would want to do this. The first is to get away from the house for personal issues. This has been used over the years for divorced couples looking to get away from each other as quickly as possible. They might try to sell the home at a profit first, but they will not wait long, and they're willing to take a loss just to move on with their lives.
The second is not as cut and dry. Because of our economy and the state of the real estate market, homes in many areas around the country are suddenly worth less than the mortgages they're stuck paying on them. Some houses have lost half their value, yet seen their mortgages go up. If someone in the household has lost their job, suddenly it's difficult to keep up with payments, whether they went up or not.
In this case, short selling means trying to get out from under an oppressive mortgage payment. It's different than foreclosure in that the owners are trying to get something so they can minimize the damage to their credit status. Banks are not overly crazy about it because, even though they know the value of the homes has decreased, they still hold out the belief that the values of those homes would still get them much better payments later down the road. No one will be agreeing to any more floating mortgages; you can bet your life on it. So, banks, which should be happy to at least have something coming in, really are not happy.
Short selling looks like a nice option for owners, right? Well, there are some issues with doing this. Even though a foreclosure will immediately hit a credit statement, short selling one's home has the potential to do the same thing. If the seller does not work out a deal with the bank to pay the difference between what they get for the house and the balance that's being lost by the bank, the bank can still report a default on the loan, which is still a negative report on your credit history. Some banks are forgiving the debt if the selling price is close enough to what the original mortgage was, but if it's not, they either want their money or they're going to get their pound of flesh.
And one last thing; a bank can report you to the credit agency, and still send your account to a collection agency to go after the balance. If you do not have the money to pay them back, that agency would probably have to get in line behind all the other agencies you've had to deal with for some of your other bills. But it's another irritation the consumer would have to deal with.
Still, it's an option to consider for some homeowners who are in serious financial distress. The overall debt would be less than just walking away from the house, and it would bring some peace of mind quicker.Immobilienmakler Heidelberg Makler Heidelberg
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