Foreclosure Vs Short Sale and Your Credit Rating

Bradford Pullman asked:

If you are behind in your mortgage payments, owe more than then the house is now worth, your mortgage company has contacted you about a foreclosure and there is some type of hardship that has caused this to happen such as loss of job, illness or a financial hardship – this would qualify you for a short sale.

A short sale is when your house is sold for a discounted price or less than you owe. The mortgage holder has to agree to the discounted price. Many homeowners are doing this type of sale themselves to save a foreclosure and save their credit rating.

The first thing that you will need to do is contact your lender to be sure that they will accept a short sale. Mortgage companies have many foreclosures these days and usually getting them to accept a discounted price is not a problem. Ask the mortgage company for a list of requirements or paperwork that you will need to gather. Once you have completed their paperwork then submit the package to them.

Banks usually will want to work with you on this to prevent a foreclosure and accept less than what is owed as it prevents the entire legal proceeding of foreclosure.

It was recently reported that almost a third of the existing homes recently sold were short sales or foreclosures. Short Sales have now become a foreclosure avoidance strategy. This could be a win-win situation for the buyer and the seller as well as the lender.

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Categories : Foreclosures

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