A short sale is a real estate transaction that gives a homeowner permission from its lending bank to sell their property for less than what they owe on the mortgage, usually due to financial hardship. But proving financial hardship is the key.
A homeowner must prove hardship though through extensive documentation. Although, granting a hardship is usually beneficial for the lending bank because it avoids the expense of a drawn out foreclosure, proving hardship to the bank is another story. Below are the three types of considerations made by a lending bank.
Attempting to short sale your home is always the best choice before choosing foreclosure and giving your home back to the bank. It also doesn't have quite the negative impact on your credit as a foreclosure, which is seen as an abandonment of debt.
Worst case scenario with a foreclosure is the bank can file a deficiency judgement against you and sue you for their losses, at which time; bankruptcy is your best protection. A short sale, on the other hand, can be negotiated and protect you in the future against liens or various repercussions.
Call Shane Ray at (719) 447-7915 for additional information on avoiding foreclosure through short sale.