Facing foreclosure is a scary reality for many Georgia homeowners. Anyone can run into financial trouble and miss a few mortgage payments, and your situation can become especially stressful if you are trying to find a solution that will prevent you from facing foreclosure and its long-term effects. One way to avoid foreclosure is to commit to a short sale, but what is a short sale, and what will it mean for your home, your finances, and your situation? This post will answer these questions so you can find the best way to avoid foreclosure on your Georgia home.
What is a short sale?
A short sale is when a homeowner sells their property for less than they owe on their mortgage, allowing them to use the funds from the sale to settle the majority of their debt while the remaining deficiency will be forgiven by the lender. This is usually done during periods when home prices have decreased so the market value of the property is lower than the homeowner’s debt.
For a short sale to be viable, the homeowner must have their lender’s agreement, which can be obtained through an application process. In Georgia, this process involves the homeowner identifying financial distress and discussing their situation with the lender. The homeowner may also need to present documents such as financial statements, tax returns, and anything else relevant to the property. If the lender approves the short sale, then the property will be listed with a real estate agent, likely one who has experience with short sales. It will be the realtor’s responsibility to market the property to potential buyers, negotiate offers, and ensure the sale is completed according to Georgia standards.
What are the effects of a short sale?
First and foremost, a short sale allows the homeowner to avoid the long-term effects of foreclosure, such as a mark on their credit report. It also allows them to escape further debt because the lender will forgive the remaining deficiency on the homeowner’s mortgage payments (as long as the lender approved the final selling price of the home during the transaction). This means that the homeowner can move forward from their financial problems with a clean slate.
However, this process will still cause a slight drop in the homeowner’s credit ratings, which can impact their ability to obtain other loans and increase interest rates. Additionally, there can be tax consequences, as the IRS will consider any forgiven debt to be taxable income.
Is a short sale right for me?
The best way to determine if a short sale is right for you is to review all of your options for avoiding foreclosure in Georgia. As long as you are proactive from the moment you realize that you will not be able to make your payments on time, you will have plenty of choices available for resolving your default and moving forward. For example, you can reach out to your lender to discuss reinstatement, loan modification, and forbearance. These options will allow you to settle your debts and keep your house. However, if selling your house is the best option, you can consider a traditional sale, a short sale or, as a last resort, deed-in-lieu of foreclosure. To figure out which of these options is the best for you and your situation, make sure to fully communicate with your lender and seek professional guidance if necessary.
Here’s how we can help you!
If you have a distressed property that is danger of being foreclosed, our team can make a cash offer on that property today. Selling to us will offer the benefits of a short sale without the drawbacks of commissioning a realtor and waiting for an offer from a traditional buyer. We can make a fair cash offer on your property after only 1 showing, and if you and your lender accept that offer, we can close with a local attorney in as little as 2 weeks.
If you want to learn more about how we can help you sell your house and avoid foreclosure, we invite you to visit our How It Works page. Here, we offer full transparency about our homebuying process, including details about exactly how we calculate our offers. You can also check out Our Company page to get to know our team, our credentials, and our experience. Fill out the form below to get a no-obligation cash offer started now!