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Understanding the short sale and how it might help you

Are you facing foreclosure on your home? Would you like to sell it, but you can't get enough out of it to cover your mortgage balance? If so, then you may want to consider a short sale.

A short sale is when you sell your home for less than you owe on the mortgage. Your mortgage company will need to agree to the sale and it can take a while to get the sale completed. However, you won't have your credit damaged as much as it can be with a foreclosure.

There are many benefits to a short sale, including:

-- You can reduce or eliminate your mortgage

-- You can avoid a foreclosure and the negative impact it can have.

-- You will be able to start repairing your credit faster than if you had gone through a foreclosure.

-- You could get up to $3,000 in relocation assistance in many cases.

-- You may qualify for a Fannie Mae mortgage in as little as two years rather than up to seven years if your home was foreclosed on.

When you sell your home through a short sale, you will be working with your mortgage company and a real estate agent. The home's sale price will be based upon the current market value. When you receive an offer, you will negotiate with other lienholders, such as the company that holds your second mortgage. You will review the offers and agree to the terms of the buyer. Then you will need to work with your mortgage lender and the buyer's real estate agent to complete the sale.

It can take up to four months for a short sale to be completed, although each situation is different. If you are not able to sell your house, then you may want to consider a Deed-in-Lieu of Foreclosure or a Mortgage Release.

While a short sale is not the answer for everyone facing foreclosure, it could really help you get your financial footing back. An attorney can help you determine if the short sale is the right answer for your situation.

Source: Fannie Mae, "Short Sale," accessed July 03, 2017

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