Monday, May 4, 2009

Short-Sales Not Without Risk

More people are choosing to do a short sale on their homes. The benefit of a short-sale over a foreclosure is that the homeowner walks away from the sale with their credit intact, and free from mortgage debt.

Or do they?

Some lenders are going after borrowers for the repayment of the balance still owed on the loan. A PMI Group Inc. spokesman says the mortgage insurer "primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value."

So if you plan to do a short-sale, make sure your lender agrees to eliminate the debt after the sale. If not, you could find yourself owing a mortgage without owning a home.

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