Short Payoff vs. NJ Short Sale: Which is Right for You?

nj short sale

Understanding Short Payoff

 At Veitengruber Law we strive to help our clients in individualistic ways. When referring to New Jersey law and short payoff there are requirements that we can help you more easily navigate with the lender. In a situation where a short payoff might be a better financial solution for you than a NJ short sale, here is some preliminary information that will be helpful.

 

Short Payoff is a newer, alternative option for the borrower to consider when facing a foreclosure. This involves the option for the borrower to keep the property and pay back the lender at a reduced amount, especially if the homeowner owes more than what the property is currently worth. This could be the ideal answer if the borrower is NOT having trouble with mortgage payments.

 

Not all lenders will be willing to work with this option however, and as mentioned before, Veitengruber Law can help you in navigating key requirements.

 

Short Sale Basics

 

A short payoff should not be confused with a short sale. A short sale would inevitably involve you losing your home but you would also be able to avoid foreclosure. The process of a short sale and New Jersey law involves selling the property to a third party at a price that is less than the amount the homeowner owes on their mortgage. This option also involves the lender agreeing to the sale price as satisfying the homeowner’s debt. For example: the home is valued at $250,000 and the homeowner finds a buyer for $200,000; the lender must then agree to the price of $200,000 and release the mortgage despite being “short” of what was originally owed, thus resulting in a short sale. The homeowner must also be able to show that the market value of the home was decreased.

 

This is generally the right solution if a homeowner is having trouble making the monthly mortgage payments on time or at all, because continuing along this path usually leads to default, which then leads to foreclosure.

 

Short Payoff Key Requirements

 

There are clear criteria you must meet in order for a lender to consider a short payoff as a means to resolving your debt. You would be required to pay off the debt in a single payment because there are no payment plans. This would also entail you being able to acquire the funds with respect to your damaged credit, which often involves another person becoming involved who is not a borrower on the loan. On the flipside, if you have good credit, a short payoff can be beneficial if you are simply looking for an option allowing you to move away from the property.  This may require establishing a substantial market value decrease while also being able to show a proper income and excellent credit. Short payoff also requires the completion of an application similar to a short sale or modification instead of facing foreclosure.

 

 

How Do I Decide?

 

Now the question is ultimately:  Short Payoff or. Short Sale?  How do you decide which is the best option for you?  A short payoff would likely leave you with little negative affect to your credit while getting rid of the property.  A short sale would be ideal if you are behind or will begin to be behind on mortgage payments, in order to avoid foreclosure.

 

Veitengruber Law can help you navigate with lenders and New Jersey law regarding both options. We pride ourselves on offering a thorough FREE holistic debt relief evaluation to get you started on the right answer for your situation.

 

 

 

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