What are the risks of a short sale for foreclosure avoidance?

When considering a short sale in order to avoid foreclosure in Florida, there are a few risks that one should be aware of. One of the main risks is that the homeowner will still be responsible for any debt that remains after the short sale is done. This means that even though the home has been sold for less than what is owed on the loan, the homeowner may still be responsible for any remaining debt. Another risk is that the homeowner may end up owing taxes on the amount of debt forgiven by the lender during the short sale. The government considers this as income and the homeowner may be taxed on this forgiven amount. In addition, a short sale may have a negative impact on the homeowner’s credit score. A short sale typically results in a credit score drop of at least 100 points. This could make it more difficult for the homeowner to secure other types of credit in the future. Finally, a short sale may take up to several months to be approved and finalized. During this process, homeowners must continue to make their mortgage payments. This means that during the waiting time, homeowners are still at risk of foreclosure. In conclusion, a short sale can be a viable option for avoiding foreclosure in Florida, however, homeowners should be aware of the risks associated. These can include remaining debts, potential taxes, credit score reduction, and an extended timeline.

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What are the risks of a short sale for foreclosure avoidance?

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