Pair these staggering numbers with an unemployment rate above 9%, and it’s enough to make anyone nervous. Like millions of Americans, you may have found yourself struggling or unable to pay your mortgage, and are now facing the possibility of losing your home. And unfortunately, that’s not where it ends—foreclosure devastates your credit score, and follows you around for years afterward.
You may have another option if you’re facing foreclosure—a short sale. A short sale is a settlement in which you sell your home for less than what you owe to your lender, and typically the lender forgives the rest of the loan.
A short sale is definitely a better option than a foreclosure if you can get your lender to agree to one, but keep in mind that it will still affect your credit, though not as much as a foreclosure.
This may be an obvious statement, but if at all possible, avoid a foreclosure—it will haunt you for a long time. Consider a short sale instead, and talk to your lender quickly, while you have some options. A short sale is a lengthy process, with lots of paperwork and negotiation involved, so it’s best not to attempt it on your own. Be sure to find a qualified real estate agent, who can be your advocate and work on your behalf—they’ll make the process a lot less painful.
