Buying a new house gives a feeling of ownership and that’s the reason why people want to buy a house in their life. But since buying a house is an expensive affair and requires a lot of money to invest, people often wonder how to afford to buy a house. However, in recent times, mortgage loan is the solution to such individuals. People are incessantly obtaining mortgage loans to buy new houses for them but ultimately lagging behind to pay it off, which results in falling them into mortgage debt.

Like others, if you are also under knee-deep mortgage debt and looking for a way to come out of it, short sale is the answer. Short sale is referred to properties that are sold short of the balance owed on the loan in order to stop foreclosure. It is typically the option meant for them who are unable to repay the mortgage loan and have fear to face foreclosure on their property.

Short sale opportunities have changed the way of life of many individuals and have helped them to take care of their personal finances. Rather than struggling to pay an over inflated mortgage, it is wise to sell the property to a buyer at the discounted market price and pay off the loan.

Under the Mortgage Forgiveness Debt Relief Act of 2007, people can sell their property in short sale and can pay off a part of their mortgage loan. And the remaining part which they cannot pay off any more will be forgiven. In this context, it is to be noted that until this Act was introduced, financial institutions or lenders would earn form the interest rates that would be paid by the borrowers and would also earn from foreclosure by selling the property at a double price. But now since when the Act has been introduced, this is a rare fact.

The rarer event now is that sellers can negotiate to repurchase their home at a lesser cost. People who had permissible credit score and financial situation could work through a local lending institution to secure a new mortgage to bid on their own home. But this process involved a lot of risk as most lenders would only work with homeowners who would always lag behind paying their mortgage. However, this turned out to be beneficial to the homeowners as short sales are not treated equal to a foreclosure on the credit report.

A short sale record affects the credit report only for eighteen months, as opposed to a foreclosure that affects for as long as ten years. However, financial planning should be done before you feel your credit report is affected.

In conclusion, if you are not being able to manage your finances and pay your mortgage loan back, consider selling the property in short sale and pay off the loan.


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