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Many homeowners who find themselves in a sticky mess with their mortgage(s) may try and opt for a popular option called a mortgage “short sale”. So, what are the details on short sales?

Well, if you are thinking of selling your home as a short sale but are still current on your mortgage, you may not qualify. Before doing anything, call your mortgage servicer and about their short sale procedure. Ask how the short sale will effect your credit versus a foreclosure. If your lender approves a short sale, realize that a buyer can submit an offer but the bank or lender may sit on the offer for weeks. You will need to wait to hear a response before moving forward with the sale since the lender has the final say. Make sure the offer submitted is solid, send proof that the home is worth the sales price and the reason for the hardship (known as a short sale hardship letter).

Can I Purchase Another Home if I Short Sale My Home?

No. A short sale will reduce your credit score to a point that you won’t be able to obtain another mortgage loan. If you purchase now, the home would be considered as an investment property in which you will need 20% down and this new home mortgage will carry a higher interest rate. If you have a second home, the lender will not allow the short sale on the first property. In addition, if you are unable to afford the current mortgage payments, you probably won’t be able to qualify for another mortgage at this time.