A short sale might be worth more than avoiding a foreclosure on your credit report. For some, it means cold hard cash.
1. Help the bank sell your home. In a short sale, you find someone willing to buy your home for less than what you owe on the mortgage and your lender agrees to take the sale price.2. Move on without a fight.3. Probably live in a state where it takes years, rather than months, for the bank to foreclose. In those areas, it’s cheaper for the bank to pay you to do a short sale than to pay the cost of a multi-year-long foreclosure.
1. Make sure the lender can’t come after you later to collect any shortfall between what you owe on the mortgage and what you’re selling your home for. Some, but not all, states prohibit that.2. Talk to an attorney and a tax adviser so you know what will happen financially after the short sale. If you sell now through the end of 2012, the tax rules for short sales say you won’t owe any income tax on $1 million (singles) to $2 million in forgiven mortgage debt (married couples). Those tax rules, part of the Mortgage Forgiveness Debt Relief Act, expire at the end of this year and only apply to your primary residence.3. Hire a REALTOR®; experienced in short sales to handle the transaction. Look for an agent who’s earned the SFR (short sales and foreclosure resource) designation.4. Figure out where you’re going to move and sign a lease now because your credit score will likely drop if you stop paying your mortgage and short sell your home. A low credit score can make it difficult to get a rental home.