What is the Difference Between a Foreclosure and a Short Sale?
Owning a home has been the dream of many people throughout the ages. When things work well, it can provide a roof over your head and a place to “hang your hat.” Unfortunately, it can also be a difficult situation when you experience some financial reversal. You might start out getting behind on the mortgage one month and before you know it, you are facing the possibility of losing your home to the bank.
When this happens, most people start looking for a solution. In some cases, you might be able to sell the home outright to satisfy the mortgage and perhaps even walk away with a little money in your pocket. What do you do, however, when you can’t pay the mortgage, and you owe more on the home than it is worth? This is a fairly common problem in today’s economic environment. You can get short sale help in any city or state.
You have two different choices, although neither of them is going to be ideal in all situations. Those choices are to look into the possibility of selling the home as a short sale or walking away from the home and allowing the bank to foreclose. When you take a look at the arguments for a foreclosure vs. short sale, you start to piece together which is the best choice for your situation.
Foreclosure – This is the option that most people are familiar with and it is something that might help a person out of a difficult situation. The process allows the homeowner to turn the home back over to the bank, but it isn’t all that simple of a job. That is especially true when there is a difference between what you owe on the home and what the house is worth. You might end up still owing a balance at the end, and it can cause further financial burden.
Also, a foreclosure is going to put a hit on your credit and your ability to get another loan is going to be compromised. On the upside, however, you might be able to stay in the home for an extended amount of time without paying the mortgage. It is best if you talk to a lawyer about the situation.
Short Sale – If you are upside down on your mortgage, a short sale may help you to get out from under the situation by selling the house for less than it is worth. You will need to work with the bank but it might help to preserve your credit, and you can avoid some of the issues associated with a foreclosure. At the same time, you need to be aware that you could receive a deficiency judgment and owe the balance.
This brief look at a foreclosure vs. short sale can help you to make the right decision. Just make sure you communicate with the bank and look at all of your options. You can then move forward with the best choice and start to look forward to picking up the pieces.