Homeowners who are struggling with an underwater mortgage may benefit from a short sale. Some homeowners, rather than fight a devalued home with a mortgage that is worth more than the home itself, are choosing to sell their home at a loss simply to be rid of the burden.
Short sales are usually beneficial for lenders and the Obama administration has provided incentives for lenders who work with homeowners that have an underwater mortgage and want to short sell, so homeowners may find that short selling their home may be easier than they thought.
However, those who are looking to short sale need to make sure that their lender is on board completely and they are willing to work with the homeowner during the short sale process. Some homeowners have short sold their home and found that their bank is still asking for the remaining principal that was owed on an underwater mortgage.
Homeowners that want to short sell need to make sure that if they do, their lender is going to allow them to be free from money owed on their home. If a homeowner sells their home at a loss they are not going to benefit if their bank still wants money.
So, before homeowners decide to short sell they may want to talk their lender about the options available for short selling their home and be sure that the lender is willing to forgive what is owed on an underwater mortgage if the homeowner is willing to sell at a loss.