Should you make your house payments or not in a short sale? I get this question asked to me all the time from homeowners who might be able to scrape by and continue making them, but also have decided to pursue a short sale. Well the first thing I have to say is this. I CANNOT nor WILL NOT instruct you one way or the other or offer any advice as to whether you should continue making payments if you can afford them. What I can do is offer you information in regards to the pro’s and con’s of making your payments in a short sale or not. Everybody has different situations when it comes to selling a home in a short sale, and everyone has different goals and objectives. The other thing to understand is that short sales are designed for people who have a legitimate hardship or a proven impending hardship. I have done a tremendous amount of short sales where the borrower has never missed a home payment, yet were still able to complete a short sale. I have done this with almost every major lender out there multiple times, but the borrower must have a hardship or impending hardship and we have to be able to prove this and it is always a case by case basis.
So with that being said here are the Pro’s and Con’s to making payments and NOT making payments in a short sale:
Pro’s to MAKING your payments during a short sale:
– The foreclosure clock does NOT start so you have plenty of time to get the transaction done.
– You will NOT receive any 30, 60, 90, etc late payments reported on your credit.
– Might be easier to find a place to rent when you move.
Con’s to MAKING your Payments during a short sale :
– You will NOT get any of this money back.
– You may be denied as a candidate for a short sale until you go late. (This is a requirement of FHA and the new HAFA program, as well as some other lenders)
– The process may take longer to complete, the banks have NO sense of urgency.
Pro’s to NOT Making Your Payments during a short sale :
– You will qualify much easier for a short sale
– You can still live in your home, and save the monthly mortgage payments for other expenditures.
Con’s To NOT Making Your Payments during a short sale:
– The Foreclosure Timeline Starts
– Late Payments reported on your credit history
– Might be more difficult to find a place to rent and live