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How can I stay in my home after a short sale?

For many Florida homeowners going through foreclosure, getting the proceeding dismissed, modifying the mortgage or other options are not available for one reason or another. They may try to sell the home, but find that their home is now worth less than the remaining balance on the mortgage. This is known as being “underwater” and it can mean serious problems for the homeowner.

Still, an underwater homeowner has options, and may even be able to stay in his or her house, under a short sale.

A short sale is the selling of a property for less than the value of the mortgage. Though this means that the lender will not get the mortgage amount back, often homeowners can convince their lenders that a short sale is preferable to foreclosure. For example, it does not require the lender to maintain and sell the property after seizing it.

Normally, of course, after selling your home you move out and live somewhere else. But a method known as short sale buyback or short sale and stay actually keeps residents in their homes after a short sale.

As explained in the Las Vegas Sun, in a short sale buyback the homeowner sells to another party, typically a group of investors operating as a nonprofit. That party then takes title to the home and rents it back to the homeowner for a set term of perhaps one to six years.

At the end of the term, the party that owns the home will give the resident the chance to buy it back, usually at a significantly higher price that what the resident sold it for.

This may work for those determined to stay in their home, but for many homeowners a short sale buyback may be too expensive and too much of an adjustment to make sense. A homeowner in foreclosure should discuss their priorities and needs with their attorney, to help him or her best craft a legal strategy.

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