Many homeowners that have found themselves severely underwater in their mortgage are choosing to attempt a short sale of their home in the hopes that they can get out from under a mortgage that is costing more than the home it’s attached to. However, there may be drawbacks for homeowners that choose to short sale their house.
There are benefits to short selling, but there could be drawbacks as well. There are cases where homeowners entered into a short sale agreement, had their home sold, and thought that was the end, only to be met with the fact that they still owe the bank.
While there are lenders that are willing to forgive the balance on a home if the homeowner agrees to a short sale and has an underwater mortgage, but if you are a homeowner that is considering a short sale you will want to be sure that your lender is going to forgive the remaining balance and not pursue you after the short sale for money owed.
Underwater homeowners are in a frustrating situation, but there are new programs emerging from the Obama Administration that are offering principal forgiveness on underwater homes. While short selling is a difficult situation as well, you may want to talk with your lender about principal forgiveness options before selling your home.