Short Sales Explained: 6 Major Differences Between a Short Sale and Foreclosure
A Short Sale is when the mortgage lender agrees to settle with a discounted payoff that is less than the balance owed on the loan to consummate a sale of the character and stop foreclosure. By taking this method, it will help the lender receive more of the loan balance and less hefty fees compared to a foreclosure course of action. The homeowner will also continue a better level of credit. Certain criteria must be met to qualify for a short sale. Provision of economic hardship & evidence of zero equity in the character must be submitted by the homeowner to the mortgage lender. It is an extremely complicate transaction, so be sure to select an experienced specialized who is very knowledgeable in this field.
6 Differences Between a Short Sale and a Foreclosure
1. Credit Score
A short sale lowers your credit as little as 50 points for 12 to 18 months. While Foreclosure lowers it at a minimum of 250 points for three years or longer. Without the ability to repair your credit after a foreclosure, it may affect your ability to be gainfully employed or find housing.
2. Credit History
A short sale is reported paid in complete and does not show 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 with reasonable interest rates within two years. With a foreclosure, you may wait 24-72 months.
4. Cost & Length of Time
Short sales are typically faster and less costly than foreclosure and it saves you a lot of embarrassment and shame that is associated with foreclosure. Foreclosure puts you at risk of being sued by your lender, dragging out this painful experience longer. Foreclosure also causes the homes of your neighbors to go down in value.
5. Future loans
With most lenders, a short sale does not need to be declared on a standard loan application, while a foreclosure will, consequently, skyrocketing your interest rates. Know that you may experience this reminder every time you need a loan for the rest of your life.
6. Sale of character
A short sale is a consent agreement between seller and lender while a foreclosure is a forced action upon the seller by the lender.
Many unfortunate homeowners find themselves caught up in a dilemma due to a poor local and nationwide real estate market or financial hardship. Homeowners are unable to refinance or modify their mortgage loan. Restore your dignity and peace of mind. Enjoy not only forgiveness, but some edges offer cash or other compensation to the homeowners who cooperate in this short sale course of action. Real estate firms that specialize in these types of transactions have the necessary experience and solution 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 your foreclosure proceedings.