Short Sale Vs Foreclosure

April 13, 2011

Short Sale Guides

If you find yourself in the position of having to decide between letting your lender foreclose on your home or attempting to sell in a short sale, below are some pros and cons for each option. A short sale is a great idea in the current real estate market.

Foreclosure

This is a legal process used by your lender to reclaim your property and sell it to pay off your loan. Some are opting to simply let the banks foreclose on their properties and walk away from the loan. If you have the means to continue paying your loan you should continue to pay. A foreclosure will reflect more negatively on your credit report compared to a short sale.

The foreclosure route is the shortest path to ridding yourself of your problem but also the most damaging.

Short Sale

You can request permission to conduct a short sale from your lender at any time. You do not need to be in default to receive permission however you will most likely need to meet several other criteria before you are granted permission. The obvious benefit to this is that you can get out of your current loan early if you are ok with taking a loss.

A short sale also will not hurt your credit score as bad as a foreclosure. If your credit is in ok condition you could possibly purchase another home immediately after your short sale.

At the moment the government is not taxing any debt forgive by your lender during a short sale. All the more reason to seriously consider going the short sale route.
A foreclosure is just all around a bad thing to have on your credit report and will hinder future home purchases for years to come. A short sale can be lengthy and bothersome but it will save your credit and allow you to purchase another home when you feel you are capable of fulfilling your payments.

 

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