A short sale occurs when a homeowner sells a property for less than the mortgage balance owed, requiring lender approval. This situation often arises when property values decline or homeowners face foreclosure risks. All sale proceeds go to the lender, and while sellers may still owe debt depending on lender decisions, buyers can secure homes at reduced costs, despite potential lengthy approval processes. Compared to foreclosures, short sales offer homeowners a chance to avoid greater financial fallout, although both options negatively impact credit scores.
A short sale happens when a homeowner sells their home for less than what is owed on the mortgage. The process has to be authorized by the mortgage lender.
Short sales negatively impact the owner's credit score, but don't prevent them from getting another mortgage. Foreclosures also negatively impact the owner's credit score and often prevent them from getting another mortgage for some time.
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