A short sale in Ontario may seem like a good solution when you’re having trouble making payments on your house, but will it hurt your financial opportunities in the future? Additionally, it’s uncommon for banks to approve/accept a short sale offer, which means, if you intend to sell for less than the value of your mortgage, you’re going to be paying your bank, lawyers, real estate agents, appraisers, repairs, and your moving costs all out of pocket. We think it’s important for you to fully understand what short selling is, why we think that you should avoid it, and what steps you may be able to take instead.
What is Short Selling?
When you sell your property for less than the amount owed on the mortgage, this is called Short Selling. For example, if you owe $600,000 on your mortgage, but you can only sell your house for $500,000, you would be short selling your house.
Why Should You Avoid Short Selling Your House?
While short selling your house may seem like a quick solution to your financial problems, it can actually have serious long-term consequences. Short selling your house can negatively impact your credit score, which can make it difficult to get loans or credit in the future. If you short sell your house, you may be required to pay taxes on the forgiven debt, which can be a significant expense. It can limit your ability to buy a new home, as many lenders require a waiting period before you can qualify for a new mortgage. Not to mention that the process of short selling your house can be stressful and emotionally draining, as it involves losing your home and potentially moving to a new location.
How to Avoid Short Selling Your House
If you’re struggling to make mortgage payments or facing financial difficulties, there are steps you can take to avoid short selling your house. Refinancing your mortgage can help lower your monthly payments and make it easier to keep up with your mortgage payments. A loan modification can help you renegotiate the terms of your mortgage and make it more affordable. If you have somewhere else to stay for a time, or your home can be broken up to units, house hacking or renting out your house can provide you with additional income to help you make your mortgage payments. Last but not least, seek out financial guidance from trained professionals that can help you put together a plan that benefits your future self, a simple google search or two will get you on the right track.
We Help People Thinking about Short Selling or In Pre-Foreclosure Everyday!
While short selling your house may seem like a quick solution to your financial problems, it can have serious long-term consequences. We’d love to discuss alternative options to short selling with you. We may able to make an offer for your house that keeps you in the black, take our easy questionnaire, and see if you can qualify for a better offer! We believe that by understanding what short selling is, why you should avoid it, and what steps you can take to avoid it, you can make informed decisions about your finances and avoid the stress and emotional toll of short selling your house.
