Imagine you have a $230,000 mortgage on your house. You need to sell, but the best offer you've received has been for $210,000. If you wanted to sell at this price, you'd need to bring $20K to the closing, which you can't do. But...
If you could convince your lender to accept $210,000 instead of $230,000 to pay off your mortgage, you could then sell your home for $210K without having to bring money to the closing. That’s called a short sale: When a lender accepts less than what is owed as a mortgage payoff so that you can sell your house for today’s value.
Lenders are approving short sales every day. Why? It’s not benevolence. It’s because banks have determined it’s in their best interest – it just so happens that you benefit when they do.Here’s how the lender sees it: Taking a relatively small loss now is better than the real possibility of taking a huge loss later. If you gave up on selling your house and let it go to foreclosure, for instance, the lender could lose far more.
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