Whether you’re a buyer, borrower or seller, a short sale and foreclosure both present different advantages and challenges.
What Is A Foreclosure In Washington DC ?
In simple terms, a foreclosed home is one in which the owner is unable to make his mortgage loan payments and the bank repossesses the home. If you stop making your house payments, your lender has the right to foreclose on your property so they can attempt to recover the money that was lent to you.
A home is typically foreclosed on when a borrower fails to make mortgage payments. The lending institution assumes ownership and possession of the property and evicts the borrower. The property is then usually sold at auction. A foreclosure can damage a borrower’s credit rating and make it very difficult for them to obtain a mortgage for many years.
What Is A Short Sale?
A short sale is the sale of real estate in which the proceeds from selling the property fall short of the balance owed on the mortgage. If the owner cannot afford to pay the full amount, the lien holder may agree to accept less than what is owed to them and release their lien.
In some cases, a short sale is an option agreed upon by borrowers and lenders. In a short sale, the home is sold for less than the outstanding balance of the mortgage. The unpaid balance, known as the deficiency, may or may not still be owed by the borrower.
This option typically takes some time, as a few different lending institutions may own the mortgage. All parties who have a stake in the property must agree to the terms of the sale and a potential deal could fall through if even one lender doesn’t agree. You have a few options when dealing with your mortgage company.
- Talk with your lender and discuss ways that they can work with you on your loan. We can help guide you in the right direction if you run into issues with your lender. Just reach out to us on our Contact page and let’s discuss your situation.
- Attempt a short sale or other program your lender may have that forgives part of your loan and creates a new and more affordable monthly payment so you can get back on your feet.
- If the bank still isn’t willing to work with you, your best option may be to sell your house. Work with a local real estate house buying service such as Express Homebuyers to sell your house fast for cash. If you’re interested, we can look at your situation and make you a fair offer on your house in seven minutes.
- Foreclosure. The last resort is to let the house fall into foreclosure. This is the worst possible scenario because it will harm your credit rating and you could still be left owing money to the bank even after the foreclosure is finished.
By knowing your options, you may be able to dodge significant impact to your credit score, which would allow you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for five to seven years, so if you have the opportunity, a short sale can be the better option.
Short Sale vs. Foreclosure – Your Options
While both options have ramifications, a short sale often has less of an impact on the borrower’s future credit rating. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points.
Borrowers who are foreclosed on are often ineligible to purchase another home for five to seven years with a traditional mortgage, but under certain circumstances, a short sale borrower can purchase immediately. As many Americans struggle with an economy that has yet to completely recover from the 2008 crash, people are having a hard time making monthly mortgage payments. If you find yourself in this situation, you have three options:
1- accept having your house foreclosed by the bank
2- initiate a short sale of your house
3- sell your house fast to a reputable company such as Express Homebuyers. This seems like the easiest option for a borrower having trouble paying their mortgage.
We would like to make you a free, no-obligation, fair cash offer on your house.