While short sales are not a big part of the market in Colorado Springs currently, they still pop up from time to time. There are plenty of people who don’t have a clear grasp of what short sales are or how they work. Let’s discuss.
A short sale is when a person sells their home for less than what is owed on the mortgage or mortgages on the property. The owner negotiates with their lender(s) to accept less than what is owed, and the proceeds of the sale go towards that balance. Short sales can be one solution for people who really need to sell their home in Colorado Springs, but owe more than what the home is worth.
There’s plenty of myths about short sales.
A short sale will damage your credit as much as a foreclosure
Maybe. Maybe not. In some cases, a short sale is less damaging to your credit. Some lenders see foreclosure as a lack of responsibility, while in a short sale, the owner is trying to settle the matter in a more responsible manner. A short sale doesn’t automatically ruin your credit more than a foreclosure.
You must be behind on payments to negotiate a short sale.
Not anymore. If you can prove your financial hardship, lenders are more willing to negotiate. A death in the family, divorce, job loss, loss of property value, or a mortgage rate hike may help you work out a short sale agreement with your lender. You don’t want to just stop paying (which WILL hurt your credit) without at least talking to your lender first.
You can’t buy a home for five to seven years after a short sale.
Again, not always. Sometimes, the waiting interval can be as low as 2 or 3 years. You need to talk with a home financing specialist to get the true story on your particular situation.
Pass it on!
Short sales used to be scary and difficult, but times have changed. Sometimes, a short sale can be a reasonable answer to a difficult financial situation. Please pass along this information to anyone who might benefit!