I live in New Mexico and my house is in foreclosure. Is a short sale a good option?
Jan 19, 2009 in
Financial and Loan Tips
Diana
My house is currently in foreclosure. Ive talked to the lenders Countrywide and they suggested I do a short sale. They said to try to sell it at a price comparable to what other houses in the neighborhood sell for. They said if it doesnt sell for that then keep lowering the price. If that happens am I going to have to pay the remainder on it? Would it just be better to let it stay on foreclosure?
My house is currently in foreclosure. Ive talked to the lenders Countrywide and they suggested I do a short sale. They said to try to sell it at a price comparable to what other houses in the neighborhood sell for. They said if it doesnt sell for that then keep lowering the price. If that happens am I going to have to pay the remainder on it? Would it just be better to let it stay on foreclosure?
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3 comments
acermill on January 22, 2009 at 6:19 am
Both a short sale and a foreclosure are going to trash your credit score. A short sale is easier for the lender, since you do the work of finding a buyer for the property and the lender merely approves or rejects the offers tendered. If you have other assets of strong value, the lender may come after you for the shortfall involved. It’s the lender’s call. They can do that with either a foreclosure or short sale.
Rush is a band on January 24, 2009 at 6:04 pm
A short sale is your best option at this point (short of getting the loan current). A short sale is also much less damaging to your credit than a full fledged foreclosure (or even a deed-in-lieu of foreclosure).
Make sure that the short sale paperwork says that you aren’t responsible for the difference. Many times a short sale means that the lender agrees that this reduced amount satisfies the mortgage completely. In a full foreclosure, you don’t necessarily get the same kind of protection and can owe the difference between what was owed (plus fees) and what the home sold for.
There is also an outside chance that you could get a 1099 (which is a tax form) that counts the difference between what you owed and what the house sold for as TAXABLE income to you. Find out if they do that…
good luck!
marina C on January 26, 2009 at 1:09 am
Foreclosure does a lot of damage to your credit score. On your future mortgage application you have to report that you had lost a home in foreclosure. It will limit your chances of getting a new loan for nearly 7 yrs.
So short sale is better, as I had read in an article that banks while evaluating a borrower who had a short sale or foreclosure in his past would probably give slight edge to the short sale.