Short Sale – New Exit Strategy

For all homeowners who can no longer make their mortgage payment (for whatever genuine reason, mostly situations that are out of one’s control ), there are two options:

1. Foreclosure: After few default payments, mortgage lender takes control of the home. Often, not a good option since it sticks on credit record for at least 7 years.

2. Short Sale: Not always a pleasant transaction but better among the two options.

So what exactly is Short Sale?

In simple terms:

In Short Sale, the seller makes an arrangement with their mortgage lender to accept a home price that is less than the amount owed on the property (citing valid reasons mostly financial hardship).

As part of this arrangement, if the lender is satisfied with the explanation of the seller, after verification, the lender may waive off the rest of the loan much to the relief of the seller.

Not all lenders accept short sales or discounted payoffs. Not all sellers qualify for short sales.

In the current scenario of Arizona (AZ) Real Estate, short sales seem to be on the rise and seem to be the favorite exit strategy for most homeowners who dont want to go though the stigma of foreclosure process and also want to protect their credit history.