Get ready to bust some myths about short sales!

Short sales have become an excellent solution for homeowners who want to avoid foreclosure.

Basically, a short sale happens when a property is sold for less than the balance remaining on the mortgage loan. With a short sale, the debt is settled and you no longer owe anything to the bank.  

However, despite the increasing number of short sales, it remains a mystery to a lot of people. There are still many misconceptions and myths about it.

In this article, we will debunk those myths so you can have a clearer understanding of what a short sale is. This will also help you determine if a  short sale is the best option for your Long Island NY home.

Here are four common misconceptions about short sales:

Myth #1: Banks would rather foreclose than approve short sales

This is one of the most common misconceptions about short sales. You have to remember that banks are in the business of lending money. They are not really into buying and selling real estate. Banks have also publicly stated that if a person is qualified for a short sale, the deal needs to be considered.

Banks do not want to foreclose on your property because the process is costly. They don’t want to take possession of your property and be stuck with marketing and selling it.

In most cases, they would rather help you short sale your home so they can recover what they can of your mortgage funds. Banks receive more on their investment through a short sale than a foreclosure.

Myth #2: Buyers are not interested in short sale properties

This is a myth that sellers often encounter. Actually, the opposite is true. In fact, many Long Island NY short sale agents receive calls from buyers who are only interested in short sales.

Buyers love short sales because the properties sell for less than a comparable traditional sale. Short sales are also considered “good deals” because homes are usually well maintained and in much better condition than foreclosures.

Myth #3: A short sale will ruin my credit score

A short sale won’t hurt your credit as bad as a foreclosure. A short sale can lessen your credit score by 60 to 100 points, while a foreclosure may cost you as much as 250 to 300 points.

What can really damage your credit score is your delinquent mortgage payments. However, if you can negotiate your foreclosure process without missing your monthly payments, your credit will not be impacted as much as someone who quit making the payments.

Myth #4: I won’t be able to get a new mortgage if I have completed a short sale

If you’re looking at doing a short sale on your home, you’re probably wondering if you can still get a mortgage after completing a short sale.

The short answer is YES!

In fact, it is easier than ever to get a new mortgage after a short sale. By choosing a short sale over foreclosure, the damage to your credit score is minimized. This will make getting new financing easier as compared if you had undergone a foreclosure. The short sale will remain on your credit record for 12 to 18 months, which is better compared to seven years for a foreclosure.

Still not sure if a short sale is right for you? I’ll be happy to discuss your situation and help you identify your options.

Call me, Rene Perrin, at 516-802-3785. I know everyone’s situation is different. Once I understand your unique circumstances, I will help you find the best solution to your real estate needs.