A short sale is MUCH better option than foreclosing.
What Is Foreclosure and what are the repercussions of having one?
Foreclosure is when you have stopped making your mortgage payments for at least 3 months causing your home to go into the pre-foreclosure process. You will be given a hearing date at which you will either go to the courthouse and make right the payments you owe, or the bank will most likely purchase your home. Your credit is ruined for 7-10 years, and you will most likely receive a deficiency lien from the lender for the amount you never repaid them. If you move out of state, your deficiency lien does not follow you to another state. If you wait out the 7-10 years and do not pay the deficiency lien, it “falls off” your credit report and basically goes away. However, if you attempt to borrow ANY money from anyone in the next 7-10 years, you will have to pay the deficiency lien off first and your credit will be so bad that you will probably not qualify to borrow any money.
What is a Short Sale and what are the repercussions of doing one?
A short sale is when you still own your property, but you are having trouble making your payments or have stopped making your payments for about 30 days. If you have stopped making your payments, you are in pre-foreclosure, but you still own your home. Short sales work best when you have already had your home on the market for sale showing your attempt to sell the home. You should have it marketed as a “potential short sale” as any and all offers would be subject to lender approval. Let’s say you owe $200,000 on your mortgage, and you receive an offer for $150,000. At the time you receive the offer, you will submit the offer, which MUST include short sale verbiage, along with the documents listed below to your lender. You are basically asking your lender to forgive the $50,000 difference that you owe on the home. Lenders typically take between 4-8 weeks to respond to short sale offers as they have to evaluate your financial situation before making a decision. If the lender accepts your short sale, you will be forgiven the difference and will not have to pay the $50,000 at closing. However, you will most likely receive a 1099 for the $50,000, which just means you will be taxed on that amount…this is much better than having to come up with $50,000. Short sales also affect your credit in a negative way, but only for 2-4 years.
What Is Foreclosure and what are the repercussions of having one?
Foreclosure is when you have stopped making your mortgage payments for at least 3 months causing your home to go into the pre-foreclosure process. You will be given a hearing date at which you will either go to the courthouse and make right the payments you owe, or the bank will most likely purchase your home. Your credit is ruined for 7-10 years, and you will most likely receive a deficiency lien from the lender for the amount you never repaid them. If you move out of state, your deficiency lien does not follow you to another state. If you wait out the 7-10 years and do not pay the deficiency lien, it “falls off” your credit report and basically goes away. However, if you attempt to borrow ANY money from anyone in the next 7-10 years, you will have to pay the deficiency lien off first and your credit will be so bad that you will probably not qualify to borrow any money.
What is a Short Sale and what are the repercussions of doing one?
A short sale is when you still own your property, but you are having trouble making your payments or have stopped making your payments for about 30 days. If you have stopped making your payments, you are in pre-foreclosure, but you still own your home. Short sales work best when you have already had your home on the market for sale showing your attempt to sell the home. You should have it marketed as a “potential short sale” as any and all offers would be subject to lender approval. Let’s say you owe $200,000 on your mortgage, and you receive an offer for $150,000. At the time you receive the offer, you will submit the offer, which MUST include short sale verbiage, along with the documents listed below to your lender. You are basically asking your lender to forgive the $50,000 difference that you owe on the home. Lenders typically take between 4-8 weeks to respond to short sale offers as they have to evaluate your financial situation before making a decision. If the lender accepts your short sale, you will be forgiven the difference and will not have to pay the $50,000 at closing. However, you will most likely receive a 1099 for the $50,000, which just means you will be taxed on that amount…this is much better than having to come up with $50,000. Short sales also affect your credit in a negative way, but only for 2-4 years.
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