Short Sale VS. Foreclosure: Do You Know the Difference?
Homeownership is the ultimate American dream. But every now and then, life throws curveballs that sometimes we just miss. In times like this, those hard falls can take a major toll on our financial health, ultimately putting our home and livelihood at risk. Foreclosures and short sales are both options for homeowners who fall behind on mortgage payments, but it's important to understand the difference between these two processes. So, this week we're sharing with you the difference between the two, and what you should do if you find yourself in need of one of these options.
What is a Short Sale?
In a short sale, your lender may agree to accept less than the full amount owed on your mortgage loan, allowing you to sell your property for less than the total owed. The difference between the final amount paid and the amount owed is called a deficiency. Short sales are generally allowed only in case of economic or financial hardship.
What is a Foreclosure?
Foreclosure is a legal process by which your lender obtains title (ownership) to your property so it can be sold and proceeds applied toward the defaulted mortgage loan. The law requires a series of notices and waiting periods before ownership is legally transferred to the lender.
Which is the Best Option?
Due to the expense of foreclosure, the short sale alternative has become popular when available. A new buyer is located at the beginning of the short sale process, so there’s no need for the lender to take title to the property. Lenders often incur a smaller loss and reduce the risk of ongoing expenses. For an owner, a short sale can be less "public," as there are no published legal notices or property auctions.
How do these Impact Credit?
A foreclosure can be tremendously damaging, impacting your ability to acquire credit for up to seven years. While a short sale can have a less severe impact than a foreclosure, it can still preclude you from obtaining a conventional home loan for several up to a full seven years. In either case, lingering effects are influenced by many factors, including federal, state and local laws and circumstances surrounding the event.
Let MHQ Mortgage Headquarters be Your Mortgage Guide!
Due to the long term potential economic, legal, credit and tax consequences, it's best for anyone faced with either a short sale or foreclosure to consult with an experienced attorney and tax pro. As always, we're happy to provide referrals as needed. When you're in need of mortgage guidance or recommendations, rely on the expertise of Mortgage Headquarters of Missouri to get you the information you need. MHQ Mortgage Headquarters will gladly be your mortgage guide to help you with your financial needs.
Mortgage Headquarters of Missouri, Inc
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Website - www.MHQMortgage.com
What is a Short Sale?
In a short sale, your lender may agree to accept less than the full amount owed on your mortgage loan, allowing you to sell your property for less than the total owed. The difference between the final amount paid and the amount owed is called a deficiency. Short sales are generally allowed only in case of economic or financial hardship.
What is a Foreclosure?
Foreclosure is a legal process by which your lender obtains title (ownership) to your property so it can be sold and proceeds applied toward the defaulted mortgage loan. The law requires a series of notices and waiting periods before ownership is legally transferred to the lender.
Which is the Best Option?
Due to the expense of foreclosure, the short sale alternative has become popular when available. A new buyer is located at the beginning of the short sale process, so there’s no need for the lender to take title to the property. Lenders often incur a smaller loss and reduce the risk of ongoing expenses. For an owner, a short sale can be less "public," as there are no published legal notices or property auctions.
How do these Impact Credit?
A foreclosure can be tremendously damaging, impacting your ability to acquire credit for up to seven years. While a short sale can have a less severe impact than a foreclosure, it can still preclude you from obtaining a conventional home loan for several up to a full seven years. In either case, lingering effects are influenced by many factors, including federal, state and local laws and circumstances surrounding the event.
Let MHQ Mortgage Headquarters be Your Mortgage Guide!
Due to the long term potential economic, legal, credit and tax consequences, it's best for anyone faced with either a short sale or foreclosure to consult with an experienced attorney and tax pro. As always, we're happy to provide referrals as needed. When you're in need of mortgage guidance or recommendations, rely on the expertise of Mortgage Headquarters of Missouri to get you the information you need. MHQ Mortgage Headquarters will gladly be your mortgage guide to help you with your financial needs.
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Website - www.MHQMortgage.com
Comments
Post a Comment