What Does the Term Short Sale Mean?
Homeowners facing foreclosure or other financial hardship may turn to the short sale to get relief from mortgage payments. While the process is complex and does have its shortcomings, a short sale is an alternative that may be worthwhile for owners, lenders and buyers.
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Definition
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When individuals choose to pursue a short sale, they are agreeing to sell their home for an amount less than what they owe to their lender. The lender must agree to accept this lower amount before the homeowner can continue the process.
Benefits
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When homeowners are facing foreclosure, short sales can become a desirable alternative. According to a Broderick Perkins article on the Realty Times website, not only can a short sale allow owners to escape the burden of mortgage payments they can't afford, but the lenders also save money by avoiding the costs associated with the foreclosure process.
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Considerations
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There are drawbacks to short sales. Despite the name, they are often time-consuming, because lenders must approve the sale and buyer. This can prolong the process for the owner and may scare off potential buyers. In addition, short sales can have a negative impact on owners' credit scores, although not as damaging as a foreclosure would be.
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