In a financial crisis, a short sale might seem like your only option. However, many times you have better pathways to improving your economic situation. In general, you only want to consider a short sale if you only face mortgage payments. People who experience debt know; this is rarely the case.
For New Jersey residents unable to pay a debt, you are not without options. Keep reading to learn about short sale alternatives and reasons to avoid selling your house if possible.
New Jersey Assembly Bill 2060 states that lenders must respond to good faith short sale offers within 60 days. However, the short sale process still takes a long time. You can expect the entire procedure, including preparing documents, determining price and negotiating with your lender, to take six months. After that, you might still owe the remaining debt on your mortgage. If you file for Chapter 7 bankruptcy, you still might lose your home. However, the mortgage lender cannot sue you for the remaining amount you owe them.
Negotiate for a loan modification
A bank might accept a loan modification if you can make lower payments. You do not necessarily have to be current on your payments, but the bank might tack what you owe back onto the total amount. Loan modifications can decrease the interest, extend the terms or do both. Sometimes a bank is more willing to negotiate than you might expect. Depending on the situation, a lender might prefer a loan modification to a short sale.
Sometimes, you cannot avoid a short sale. However, if you qualify for bankruptcy or have other options available, you should strongly consider them. Do not give up your home if you do not have to.