Understanding a little bit about the short sale process can help you make a more sound decision.

What is a short sale? A short sale is a when the bank agrees to take less than what is owed to them to prevent the home from going into foreclosure. In most instances the bank would rather do a short sale then allow the home to go to foreclosure. 

There are some misunderstandings of short sales and what they do to people’s credit. A short sale will generally show as a loan paid in full less then agreed upon. This can make your scores drop anywhere between 50-100 points. If you have to short sale your home, it is best, if possible, to keep current on as many of your bills as possible.

 People ask, can you short sale if you are current on your mortgage? Generally no, you cannot short sale a home if you are current.  It is a frustrating place to be if you can barely make your monthly mortgage payment.

 Should you move out of your house if you are doing a short sale? I would argue no, and the reason is because if you have fallen behind and move out, the bank may consider that you have abondened the home and might be less inclind to do a short sale because you are not there so as a homeowner, you are in no danger of losing your place to live. Banks are more apt to try to help homeowners in the home then those who have left because they are so many short sales they are working on in today’s market. Not to mention, if you stay in the home while attempting to do a short sale, you may be surprised that the bank could offer a modification on the loan. This would allow you to stay in the home and not do a short sale.

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