Short sales better option for homeowners

MSNBC reports that the recent increase in short sales may be the relief that the housing market needs during its slow recovery. The number of short sales has increased by 26,000 this year following a jump in the number of foreclosures and short sales in 2010.

According to the source, short sales may also be a better option for homeowners when compared to foreclosures, especially for those who don't qualify for loan modification.

Homeowners who choose short sales can stay in their homes and start rebuilding their credit sooner than those who find themselves in foreclosure, says the source. FICO reports that the number of points homeowners lose is the same when foreclosing or selling the home for less than the amount owed on the mortgage, but those who opt for short sales will likely obtain a loan quicker, which will help improve their credit scores.

The source reports that some economists are concerned that the decrease in foreclosures may be a result of a built up amount of foreclosures that have not been processed.

"Foreclosures are going to be a drag on the market for a long period of time," Dean Baker of the Center for Economic and Policy Research told the source. "Until these distressed homes are resold and assimilated back into the market, real estate prices can't stabilize."

Source: Today's MLS Real Estate Dec. 30, 2011