Short Sales Explained: 6 Key Differences Between a Short Sale and a Foreclosure
A short sale is when the mortgage lender agrees to settle with a discounted payment that is less than the balance owed on the loan in order to consume a sale of the property and stop the foreclosure. By going this route, you will help the lender receive a higher portion of the loan balance and lower fees compared to a foreclosure process. The owner will also maintain a better level of credit. Certain criteria must be met to qualify for a short sale. The homeowner must submit the hardship provision and evidence of zero equity in the property to the mortgage lender. 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 as little as 50 points over 12 to 18 months. While foreclosure reduces it to a minimum of 250 points for three years or more. Without the ability to repair your credit after a foreclosure, it can affect your ability to hold gainful employment or find housing.
2. Credit history
A short sale is reported 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 record.
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 anywhere from 24 to 72 months.
4. Cost and time duration
Short sales are usually faster and less expensive than foreclosure and save you a lot of embarrassment and embarrassment associated with foreclosure. Foreclosure puts you at risk of being sued by your lender, prolonging this painful experience longer. Foreclosure also causes your neighbors’ homes to drop 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 trapped in a dilemma due to a poor local and national real estate market 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 solution to eliminate your mortgage debt problems and give you the free lifestyle you crave. 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 your foreclosure proceedings.