With the difficult economic times, there is no disputing the fact that many people are going through difficulties as they pay their mortgages. Indeed, statistics show that many home owners are willing to abandon their homes. One of the reasons behind such moves is lack of employment. However, what has been confusing almost everyone is whether they should choose a foreclosure or a short sale. When it comes to a short sale vs foreclosure, experts have different opinions. What is most important for you is to understand the real facts so that you may make the wisest decision.
The Difference Between a Short Sale and a Foreclosure
A short sale is one of the alternatives to foreclosure. In the case of a foreclosure, you will be leaving the process of recovering the debt to the lender. Here, they will move in after the expiry of the time allowed and you therefore will have no control over what they do with your house. What happens is that the mortgage borrower obtains termination rights through a court process or another legally recognized process. After that, they will go ahead to sale your house through an auction and use the money to recover the unpaid loan amount.
On the other hand, a short sale allows for an agreement between the parties involved in the mortgage to put up the home for sale and use the money to pay part of the pending mortgage amount. Usually, the house is sold for an amount that is less than what the borrower is required to pay. However, under the agreement, the lender may agree to forego some of the benefits that they would have enjoyed and only let the borrower to pay his part. This therefore means that you may pay for much less than in a foreclosure.
If you want to prevent foreclosure by using a short sale, then you keenly need to compare a foreclosure vs short sale. One of the advantages of a short sale is that you are always in control of the selling process. At least, you will know who will be buying your house unlike when it would have been sold through an auction. In this process, the sale of the home will be handled just like any other house selling process. You therefore can rest assured that there will be no stigma that many people go through whenever they are faced with a foreclosure.
It also is much easier to buy a house again after a short sale. The laws allow you to buy another home immediately if your payments have not fallen behind thirty days late and if the lender does not require you to pay the loan. However, in the case of a foreclosure, you will have to wait until after five years. Even after that, there are many other requirements that you will be required to meet before you can buy again. Most definitely, you are looking for a better process to up your home and this is the reason why you need to stop foreclosures.