With the housing market down as drastically as it is and with prices as sky high as they were in the recent past, in addition to the less-than-scrupulous mortgages that were becoming the norm a lot of people are finding themselves in a situation where they owe more on their mortgage than the home is currently worth. This is called being upside down on your mortgage or your property.
The best thing for an upside down property seller to do is to hold onto their home if they can until the prices turn around, but if this isn?t possible there are a couple options. The dreaded foreclosure or a short sell. A short sell is a way to avoid a foreclosure and it can save the bank some money, in fact the bank won?t approve a short sell unless it is a financially good deal for them.
So a short sell may be a good way for a seller to go, they can get out from under their home and sell the property at a price that is reasonable for the current market. But you don?t get to walk away unscathed. A short sell will affect your credit rating, it won?t be as bad as a foreclosure would be but it?s still going to be a negative notation. A short sell is considered a settlement and will remain on your credit report for seven years. This can affect your ability to get another mortgage for a few years, depending upon the rest of the credit report.