Many homeowners in today’s market are not able to sell their home at the price they would have liked, nor are they able to afford it. These homes may sit vacant or with problem renters for several months while the homeowner figure out that selling the house is just not possible. When this happens, there is also often a problem with paying their mortgage—so what do you do? This leaves many people wondering if foreclosure is really the only option available to them when facing this situation? Would a “short sale” work better for them?
Both foreclosure and short sale are considered to be a part of the Resolution Process, but there are some significant differences between the two.
What Is A Foreclosure In San Antonio and Central Texas, Texas?
Foreclosure happens when you default on your mortgage and your bank repossesses the property. This means that the primary owner of the home is no longer making payments, or has not made a full payment in months. The bank then takes over ownership of the house and starts to sell it off (through an auction house) to recover what is owed them (principle, interest, taxes, foreclosure fees). The time this process usually takes can vary; however it typically takes 6-9 months for all legal proceedings to take place before someone can actually buy the vacated home. If you’re already facing financial problems with your mortgage—a foreclosure should be the very last option you should consider. Depending at what point of the process you are at, you still have options.
What Is A Short Sale?
A Short Sale is the process of selling your property for less than what is owed on it. You will need to obtain a written “approval” from your bank before you put the home up for sale, because this may be their only option in order to get out of your mortgage by selling your house quickly and for below market value. They are hoping that they can at least sell it for enough money to pay off what they are owed by you—which is often much less than the original price of the home. Your payment history, how much equity you have in your house, if it’s still occupied or vacant and recent prices of homes similar to yours all factor into whether or not your bank will approve a Short Sale.
This options typically takes longer than foreclosure, and the bank will approve it if they feel that they can get enough money to cover their loss.
Your Options When It Comes to a Short Sale vs Foreclosure
Both alternatives have their advantages and disadvantages, but a short sale has less of an impact on the borrower’s credit score than a foreclosure.. A foreclosure could impact a borrower’s credit score by more points, where a short sale may only dent the credit score.
Borrowers who are foreclosed on may have different options when it comes to qualifying for a loan in the future.
But you should know that both options are very serious. If you’ve missed payments on your mortgage or have no equity in your home, contact us today to find out what the best option is for you! before you go through the Foreclosure or Short Sale route.
You Have Options!
You Have Options! You may be able to avoid having your credit score severely impacted if you know your alternatives, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so getting help from a professional is always recommended.
Have a pending foreclosure? Reach out to Us to know Your Options!.