#3 Seller Myth In Short Sales; Default Payments and Home Equity Loans Will Not Impact Short Sale Approval (Part I)

Unfortunately, many sellers seeking short sale approval from their banks are under the impression that this is an opportunity to ‘cut the cord’ and get out of their property clean and scot-free. As you can tell from reading this report, it’s not as simple as that.

In many cases, homeowners have defaulted on loan payments and/or Homeowners Association dues on the property in question. If this is your situation, don’t go into the short sale process assuming that you will be absolved of these back payments. In fact, any money you owe will certainly factor into the short sale approval by your bank. You may come out of the short sale process still owing your creditors, it could become a compromise sale, or you may not be approved for a short sale at all. Rather, the bank may opt for foreclosure if the payment situation is severe.

If you are considering a short sale, it’s important to stay current on your mortgage payments and HOA dues. This will greatly improve your chances of short sale approval. It will also help your credit rating. When all payments are up to date, a short sale will not have much impact on your credit score, and in some situations it can have no impact at all, but a history of defaulted payments can have a negative impact on your credit score.

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