There are many reasons why you might consider a short sale.  In this blog, we will consider these points.


      1. Short sales are perceived to be less damaging to the credit.   However both can be a painful process for the family and can take up to a year to complete.
      2. If you are not able to pay the mortgage premium, you can try to work with the lender to negotiate a lower monthly payment, called a loan modification. If this fails,  a short sale is the best case scenario.
      3. You are more likely to avoid a bankruptcy with a short sale. Chapter 13 bankruptcy can be used to wipe out the junior liens. Seek good legal counsel.
      4. It is usually easier and quicker to recover from a short sale situation instead of a foreclosure.
      5. It is usually quicker to be able to qualify for a new mortgage with a short sale rather than a foreclosure.
      6. There is the possibility that the lender will forgive the difference between the price of the mortgage and the amount you owe. However be sure to check with a tax advisor, as the forgiven debt must be reported to the IRS. 
      7. By the end of the process, you might not owe anything but you will no longer have your home.   

Participating in a short sale can give some control in the process of losing your home.  You will be finding a buyer and can negotiate terms with the bank. Although a short sale does damage your credit, by taking this approach, you can avoid the really major hit to your credit that happens with a foreclosure. By decreasing the damage to your credit score(s), you put yourself in a better position to purchase in the near future.

In the end,  perhaps a short sale is your answer.  The banks are finding that short sales are less expensive and more efficient for them in the long run. 

Feel free to contact me for a confidential discussion regarding your specific situation and the choices you have.