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

A short sale is a process in which your mortgage lender agrees to accept a lower payment than what is owed on a loan in order to avoid a foreclosure. When a homeowner falls behind in their mortgage payments, their lender may decide to short sale the property in order to keep it from going into foreclosure. The primary risk of a short sale for foreclosure avoidance is that it will damage your credit score. A short sale appears on your credit report, and it can remain on your record for up to seven years. This can be difficult to overcome, as it can make it difficult to secure future lines of credit or loans. Another risk of a short sale is that it may not work out in the end. Even if your lender agrees to the short sale, there is no guarantee that the process will be completed. If the short sale process does not reach its completion, then you are at risk of having a foreclosure on your record. Finally, there is the risk of a deficiency. A deficiency is when the lender is not able to get back the full amount of what was owed on the loan, even after the short sale. This can create a liability, where the borrower is then responsible for making up the difference. This can be a major risk, especially if the homeowner does not have the means to make up the difference. Overall, a short sale can be a strategy for avoiding foreclosure. However, the risks must be considered before agreeing to a short sale. These risks include damage to your credit score, the possibility of foreclosure, and a potential deficiency.

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

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