Is it good to buy a house in short sale?

If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live. However, a short sale can forestall foreclosure and its negative impact on your credit.

What is a short sale in house buying?

In a short sale, the bank or mortgage lender does not evict the homeowner. Instead, the lender lets the current owner sell the house for less than their mortgage debt. The benefit of buying a short sale is that you could find a home at a reduced price.

Why would a homeowner do a short sale?

Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them. They were much more prevalent during the Great Recession, when many U.S. homeowners were “underwater” on their home loans; i.e., they owed more on their homes than the homes were worth in value.

How do you buy a short sale property?

A typical short sale involves a series of steps, generally in this order, according to Bobbi Dempsey , co-author of “The Complete Idiot’s Guide to Buying Foreclosures.” Identify potential short sales. View the property. Do your research. Find all liens and mortgages. Figure out the financing. Contact the lender.

Why to buy a short sale?

There’s only one reason to buy a short sale home — to get a great deal. “Short sale” simply means the sales price is less than the balance of mortgage(s) owed against it. Short sales can take longer to close because lenders are not in the business of selling houses.

What are the consequences of short sale?

The consequences of a short sale directly affect your credit worthiness. A short sale or a foreclosure are all recorded as defaulted loans which is severe to your credit worthiness from then going forward. In some cases, your credit score can be lowered which means higher interests on future loans and credit cards.

What is a short sale process?

A short sale is a process in which the lender allows the homeowner to sell his house for less than the value he owes on the mortgage. It is a substantial discount is given to the home to let it get sold fast.