Buying a home is often one of the most exciting times in a person’s life, especially if it is the first home. Unfortunately, even if a person could afford the home when first purchased, financial issues could affect anyone at any time. In some cases, New Jersey homeowners, including yourself, could even end up facing foreclosure.
You undoubtedly never planned to end up in such a difficult scenario, and the idea of losing your home to foreclosure likely keeps you up at night. Fortunately, you may still have options you could take advantage of in hopes of getting out of the situation with as little financial and credit damage as possible.
Consider a short sale
Your situation may have reached a point where keeping your home is not an option if you want to address the problem head on. However, that does not mean that you have to simply accept that foreclosure is in your future. One possible option to help you address this predicament is a short sale. While a short sale could result in your avoiding foreclosure, it does require that your mortgage lender agree to the sale.
This option requires lender approval because a short sale involves the homeowner selling the home to a third party for less than what he or she owes on the remaining mortgage loan. The profits earned from the sale go to the mortgage lender to address at least a portion of the remaining balance. In some cases, mortgage lenders forgive any amount of the mortgage not covered by the short sale, but it is possible that the lender still requires payment for anything the sale did not cover.
Is it better than foreclosure?
A short sale can still result in your credit record taking a hit, but that hit has less of an effect than if you faced foreclosure on your home. In the end, the manner in which you address a possible foreclosure is up to you. Some options could have greater consequences than others, and you may not always qualify for options you consider best. As a result, it is wise to gain information on short sales and other options for avoiding foreclosure.
It is also important to remember that the chance does exist that your mortgage lender could require you to repay any remaining balance on your loan even after a short sale. Therefore, you may want to make sure that you understand the terms of any agreement regarding a short sale with your lender before deciding this is the option for you.