A short sale occurs when the mortgage lender agrees to settle a discounted payment less than the balance owed on the loan in order to complete a sale of the property and stop foreclosure. By doing this, it will help the lender get more of the loan balance and less hefty fees compared to foreclosure proceedings. The homeowner also maintains a better level of credit. In order to qualify for a short sale, certain criteria must be met. The homeowner must provide the mortgage lender with proof of economic hardship and proof of the property’s zero equity. It is an extremely complex transaction, so be sure to choose an experienced professional who is very knowledgeable in the field.
6 Differences Between Short Sale and Foreclosure
A short sale only lowers your balance by 50 points for 12 to 18 months. While foreclosure drops him 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 work or find a home.
2. Credit History
A short sale is reported as fully paid and does not appear on a credit report. A foreclosure will stand on your credit history as a public record for 10 years or more.
3. Waiting time to buy another house
If you can stop your foreclosure, you can get loans with decent interest rates within two years. With a foreclosure, you can wait 24-72 months.
4. Cost and Duration
Short selling is typically quicker and less expensive than foreclosures, and saves you much of the embarrassment and shame associated with foreclosures. Foreclosure puts you at risk of being sued by your lender, making this painful experience longer. Foreclosure also causes your neighbors’ homes to decrease in value.
5. Future Loans
Most lenders do not require a short sale to be declared on a standard loan application, while foreclosure will therefore skyrocket your interest rates. Know that you will experience this reminder every time you need credit for the rest of your life.
6. Sale of Real Estate
A short sale is a consent agreement between the seller and the lender, while a foreclosure is a coercive action by the lender against the seller.
Many unfortunate homeowners find themselves in a dilemma due to a poor local and national housing market or financial difficulties. Homeowners are unable to refinance or modify their mortgage loan. Restore your dignity and peace of mind. Not only do you enjoy forgiveness, but some banks offer cash or other compensation to the homeowners who cooperate in this short sale process. Real estate companies that specialize in this type of transaction have the experience and solution needed 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 get your questions answered. Make the best decision of your life and stop your foreclosure proceedings.