“Short sale” is a term that refers to the sale of a home for less than the amount that is currently owed on the mortgage.
For example, a homeowner who owes $300,000 on their home and falls behind on their mortgage payments might sell their house for $275,000 to avoid going into foreclosure. This is called a short sale. The remaining $25,000 of the mortgage is known as a deficiency and in the state of Colorado may be transformed into a promissory note, charged off, forgiven or pursued as a judgement against the previous owner. The lender determines how to proceed with deficiencies in these type of sales.
Why Short Sale?
Short sales become a consideration when owners fall behind on their mortgage payments and are struggling financially. In most cases, if a seller chooses not to pursue a this type of sale, they will eventually experience a foreclosure. A seller might resort to a short sale because the financial consequences are far less severe than those resulting from a foreclosure. There are still consequences though.
This kind of sale will still result in a negative mark on the seller’s credit, but a short sale is still significantly better than a foreclosure. In most cases, an owner may buy another house immediately after this sale is processed. In a foreclosure, the owner must wait a minimum of 5 years before being approved for the purchase of another home.
Although these type of sales are beneficial for some people, not everyone is able to deal with them, especially because of how intricate they can be. Moreover, a lender will usually be in control of the entire process, so everything moves at their pace and based on what they think the appropriate actions are.
Short Sale Facts
- For this type of to be an option, the lender must give their approval. No short sale can take place without lender authorization.
- Short sales may take up to a year to fully process. There is extensive paperwork involved.
- Short sales may also be known as “pre-foreclosure” sales.
- To qualify for a sale, you must be able to prove financial hardship (divorce, medical bills, layoffs), prove that you cannot afford the monthly payment on your current mortgage, and not be eligible for a loan modification.
Zech Buys Houses Can Help!
While a short sale can be a long and frustrating process, the end result is generally positive. The seller is free of their financial burden and the buyer gets a good deal on the property. When you sell your Colorado Springs, Colorado, home with Zech Buys Houses, you get the positive end result without having to experience the frustration and long drawn out process of a short sale.
We will buy your house for cash and can close as quickly as you choose. If you’ve found yourself unable to keep up on your mortgage, give us a call today and free yourself from the burden of your home and mortgage more quickly than you ever thought possible.