Jan
09

Short Sale Vs Foreclosure Which One TO GO About

By
margret James asked:

Short Sale vs Foreclosure

In the short sale vs foreclosure comparison, it is important to have a look at how these two processes work. If you have a house, and stop making payments on it, the bank will begin the foreclosure process, in as little as six to eight weeks after your missed payment. If this occurs, you may want to fight the foreclosure using what is known as a short sale. If your sole options are a short sale or foreclosure, a short sale is usually the better road to take since it offers some protection to your credit. But , what is this?

Short Sale outlined

A short sale is a situation in which you sell your home for less than what’s owed on your current home loan. For instance, if your house is in foreclosure and you owe your lender a total of $150,000 on the property on a mortgage, the bank could foreclose on the property and then have to deal with making an attempt to sell the property. Your personal credit would be annihilated in this process since you walked away from the loan. To avoid this, you find a buyer who is ready to purchase the home from you. The problem is, the purchaser doesn’t want to pay full price. He agrees to pay $125,000 instead.

In a short sale agreement, the bank agrees to accept the lower payment as payment in full for the loan. You are forgiven for the loan in total and your buyer purchases the property for the agreed on cost. In this example of a short sale vs foreclosure, the simple benefit is that your credit isn’t destroyed in the short sale. However, you may still lose your home.

You may be able to get the lender to agree to a short refinance, where the bank will refinance the loan at the lower price and keep you on as the borrower. In a short refinance, a little of the value of the home is forgiven, which helps to lower the money payments, making it less complicated for you to make payments.

If you are a good borrower, and something has happened that has caused you to enter into the battle of short sale vs foreclosure, the best move to make is to work with your bank to find a solution. A short sale may be a good answer, as would a short refinance. In either situation, you don’t have to have the negative impact of a foreclosure on your credit history. Take the time to discover what all your options are before you agree to a short sale or any type of foreclosure.

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