Short selling involves property that is going to be sold for a price that is less than what it is worth. Often times, when a home owner in Phoenix, AZ can not afford to make their loan payments, they choose to use the method of short selling their home. It is more preferential than the lender taking possession of the property in foreclosure and having to maintain the property until it can be sold.
Short selling a property in Phoenix, Arizona requires that the bank or lender agrees to let the seller or home owner sell the home for less than the value of the current mortgage note. While banks don’t prefer to allow short selling of a home, it has become much more prevalent in recent years with the given state of the economy.
Short selling a property can be a god send for home owners that can not refinance or get their lender to agree to a loan modification. Short selling usually takes about six months or less to complete and allows the home owners to get out of their loan without owing he lender any additional money beyond the selling price of the home.
The one rare exception to this generality is when a bank or lender issues a notice of deficiency. This is where, despite agreeing to short selling a home, the bank still decides to hold the original loan holder liable for the remaining balance that was not paid off during the short selling of their home.
When that deficiency notice comes to you, despite the fact that you have avoided a foreclosure, your credit will still take a hit. So, the notice can keep you from obtaining credit in other situations, like car loans, credit cards, or a future home purchase.
Fortunately for you and all of us, banks have been forgiving a larger and larger majority of these short selling homes. Just to be safe however, you should work to negotiate for a judgment of “Payment in Full” so that the bank will keep from issuing that deficiency in judgment. Work to create a legally binding agreement that will keep the bank from coming back to you for further money.
Short selling does affect credit scores to a certain degree, but not nearly as much as a foreclosure or bankruptcy will. The bankruptcy and foreclosure can stay on your credit report for ten years, while short selling will only appear for a few years. Many people who have used short selling to rid themselves of a bad situation have been able to obtain another mortgage loan in as few as two years after.
Every mortgage lender handles the short selling of a home differently. Just be sure that you understand how your mortgage lender will handle your short selling.
Do you have questions? Read the Short sale FAQs.
Are you a Realtor? Then get free short sale training by Kevin and Fred at Free Realtor Training on ShortSalePower.com
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