Falling behind on mortgage payments due to significant financial struggles can be stressful and harrowing. Similar hardships may leave a homeowner in Cincinnati or Dayton in search of guidance concerning the available options. In some cases, a person may wish to explore the potential advantages of a short sale. While this option might not be ideal, it could be preferable to allowing a home to enter foreclosure.
What Is a Short Sale?
For individuals who are longer capable of keeping up with mortgage payments, one potential option is to sell the home and pay off the mortgage. However, if the balance on the mortgage is higher than the market value of the home, one might find it helpful to consider a short sale. This consists of selling the home for a lesser amount than what is owed on a mortgage.
How Does a Short Sale Work?
Even if a person is able to find a buyer for the home, the mortgage company must approve of the sale and agree to accept the lesser amount as final payment on the mortgage. Or, the lender might require a deficiency judgment for the difference between the sale price and the amount still due on the mortgage.
However, even if lenders accept the proposal, if the process cannot be completed within a certain time period creditors may still choose to initiate the process of foreclosure. There may also be some potential risks to using this option, as the amount of any remaining balance forgiven through a short sale could be reported as taxable income.
Is a Short Sale the Best Option for You?
Homeowners who experience prolonged periods of financial hardship may wish to stop foreclosure by any means possible. However, while a short sale could help, it might not be the best option in every situation, and those who encounter similar concerns could benefit from seeking guidance from someone with experience in the area. A bankruptcy attorney can evaluate a person’s circumstances and provide advice in choosing a path to pursue relief from debts and protect his or her financial future.