Is it a good idea to stop making mortgage payment while the home is in short sale?
Are you thinking whether you should stop making mortgage payments while the home is on short sale? If so, then you’re required to consult with the lawyer whether to stop making payments. Well, avoid asking your real estate agent as he is not licensed to offer you legal advice. There are certain benefits as well as consequences if you stop making payments. You can continue reading the article to get more information on it.
Can you tackle the trauma of foreclosure?
In most of the cases, the lenders do not authorize a short sale unless the seller gets hold of a buyer. Well, it’s the discretion of the lender whether he’ll let you sell the property on short sale.
You may begin the short sale process and stop making payments and if the short sale is denied, in this case, the lender can foreclose on your property. Most of the sellers are prepared for the worst scenario as the lenders may not approve their short sale.
What are the benefits of mortgage payment in short sale?
Here are some of the benefits of mortgage payment in short sale that you need to be aware of:
1. Can apply for new mortgage: The guidelines issued by Fannie Mae in August, 2008 stated that the borrower may immediately buy another home after short sale if the borrower has not defaulted on payment.
It’s really difficult to find a lender who’ll conduct a short sale but there are smaller banks those who do not sell to Fannie Mae and consider this kind of loan. According to the FHA, if the buyers has never defaulted on payment, he can get the loan with ease. According to the HAFA 2013 guidelines, the lenders are allowed to report “Paid in Full”, so it makes a great difference on a credit report.
2. Shields your credit report: If you make your mortgage payment on time while you’re entering the short sale process, then the credit report may not reflect any late payment.
3. Cancel without any penalty: Well, if the home is not sold or lender refuses to accept the offer from the short sale buyer, you can manage to cancel the listing as well as keep your home without foreclosure process.
What are the disadvantages of delinquent account during a short sale?
Here are some of the drawbacks of default during your short sale:
1. Blemish your credit report: Short sale and foreclosure may blemish your credit report. In most of the cases, the lender may report as a delinquent account to the credit bureau. But the lender can report a short sale as paid in full only if you’ve completed a HAFA short sale after 2013, it may not affect your credit.
2. Face problem while buying a new home: There are restrictions if you’re planning to buy a new home as the number of foreclosure and short sale is increasing. If the buyer is late by 60 days and according to the guidelines of Fannie Mae to wait two years to buy another home.
3. Foreclosure process on the property: Your property can be foreclosed by the lender if you default on your payment.
Therefore, make your payments while the home is in short sale as it can help you to avoid foreclosure on the property.