Real Estate

Short sales explained: 6 main differences between a short sale and a foreclosure

A Short Sale is when the mortgage lender agrees to agree to a discounted payment that is less than the balance due on the loan to consummate the sale of the property and stop the foreclosure. By taking this route, you will help the lender receive a larger share of the loan balance and fewer high fees compared to a foreclosure process. The owner will also maintain a better credit rating. Certain criteria must be met to qualify for a short sale. The homeowner must present to the mortgage lender the hardship provision and evidence of zero equity in the property. It is an extremely complex transaction, so be sure to select an experienced professional who is very knowledgeable in this field.

6 differences between a short sale and a foreclosure

1. Credit score

A short sale reduces your credit by just 50 points over 12 to 18 months. Whereas foreclosure reduces it to a minimum of 250 points for three years or more. Without the ability to repair your credit after foreclosure, it can affect your ability to have gainful employment or find a home.

2. Credit history

A short sale is reportedly paid in full and does not show up on a credit report. A foreclosure will be on your credit history for 10 years or more as public records.

3. Waiting period to buy another home

If you can stop your foreclosure, you can get loans at reasonable interest rates within two years. With a foreclosure, you can wait 24 to 72 months.

4. Cost and duration

Short selling is typically faster and less expensive than foreclosure and saves you a lot of embarrassment and embarrassment associated with foreclosure. Foreclosure puts you at risk of being sued by your lender, lengthening this painful experience for longer. Foreclosure also causes your neighbors’ homes to go down in value.

5. Future loans

With most lenders, you don’t need to declare a short sale on a standard loan application, while a foreclosure will therefore skyrocket your interest rates. Know that you can experience this reminder every time you need a loan for the rest of your life.

6. Sale of property

A short sale is a consent agreement between the seller and the lender, while a foreclosure is a forced action on the seller by the lender.

Many unfortunate homeowners find themselves stuck in a dilemma due to a poor housing market locally and nationally or financial difficulties. Homeowners cannot refinance or modify their home loan. Restore your dignity and peace of mind. Enjoy not only forgiveness, but some banks offer cash or other compensation to owners who cooperate in this short sale process. Real estate firms that specialize in these types of transactions have the experience and solutions necessary to eliminate your mortgage debt problems and provide you with the free lifestyle you long for. Time is of the essence, so call an agency right away to have your questions answered. Make the best decision of your life and stop the foreclosure process.

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