Whether you’re a buyer or a borrower/seller, a short sale, and
foreclosure each present different advantages and difficulties.
What Is
A Foreclosure NC?
In simple terms… “A foreclosed home is one in
which the owner is unable to make his mortgage loan payments and the bank
repossessed the home” (source). If you stop making your house payments… your lender has
the right to foreclose on your property so they can attempt to recoup their
money that was lent to you.
A home is typically foreclosed on when a borrower fails to make
mortgage payments. The lending institution assumes ownership and possession
of the property, evicting the borrower. These properties are then sold at
auction or more traditional means utilizing the service of real estate
agents. A foreclosure can damage the credit rating of a borrower, and make
it very difficult to obtain a mortgage for many years.
Depending on the state that you live in… a foreclosure can work
in different ways. Check out the foreclosure process
information over here at the
HUD Government website.
What Is
A Short Sale?
In a short sale, the home is still owned by the borrower.
The definition of a short sale is… “A short
sale is a sale of real estate in which the proceeds from selling the property will fall
short of the balance of debts secured by liens against the
property, and the property owner cannot afford to repay the liens’ full amounts
and where the lien holders agree to release their lien on the real estate
and accept less than the amount owed on the debt”.
In some cases, a short sale is an option agreed upon by
borrowers and lenders. In a short sale, the home is sold for less than the
outstanding balance of the mortgage. The unpaid balance (known as the
deficiency) may or may not still be owed by the borrower.
This option typically takes some time, as a few different
lending institutions may own the mortgage. All parties who have a stake in
the property must agree to the terms of the sale, and a potential deal
could fall through if even one lender doesn’t agree.
Short
Sale vs Foreclosure – Your Options
While both options can have ramifications, a short sale often
has less of an impact on the borrower’s creditworthiness. A foreclosure
could impact a borrower’s credit score by 300 or more points,
where a short sale may only dent the credit score by 100 points.
Borrowers who are foreclosed on are often ineligible to purchase
another home for 5-7 years with a traditional mortgage, where under
certain circumstances, a short sale borrower can purchase immediately.
As many Americans struggle with an economy that has yet to
completely recover from the 2008 crash, folks are having a hard time
making monthly mortgage payments. Choosing between being foreclosed and
initiating a short sale (or a 3rd option… selling your Mooresville house fast )is an easy choice for a borrower having troubles
paying their mortgage on time.
Sometimes, lenders are willing to work with borrowers to
complete a short sale, to avoid the fees and time-consuming process of
conducting a foreclosure.
Our suggestion is always this.
- Talk with your lender and
discuss ways that they can work with you on your loan. We offer this service where we can help guide you in the
right direction if you run into issues with your lender… just reach out to us
on our Contact page and we’ll discuss your situation. - Attempt a short sale or
other programs your lender may have that
forgives part of your loan, creates a new / more affordable monthly payment so
you can get back on your feet, etc. - If the bank isn’t willing
to work with you very much… your best option may be
to sell your house. Work with a local real estate house buyer service like
Property Solutions, LLC to sell your house
fast for an all-cash offer. If
you’re interested we can look at your situation and make you a fair offer on
your house within 24 hours. Just fill out the form
on our website over here >> - Foreclosure. Last resort is to let the house fall into foreclosure. This is
the worst possible scenario. It’ll harm your credit and you could still be left
with money owed to the bank even after the foreclosure is finished.
By knowing your options, you may be able to dodge a significant
impact on your credit score, allowing you to purchase a new home when your
situation improves. A foreclosure on your credit report makes that possibility
extremely difficult for 5-7 years, so if you have the opportunity, a short
sale can be the better option.
