Homeowners who find themselves in a situation where mortgage payments are just too expensive and cannot make their payments do have a couple of options to reconcile the situation. One option is foreclosure, but this can lead to many more issues down the road in terms of the homeowner’s creditworthiness. Another option is to do a short sale, which can give someone the control in selling their house to rectify the situation with the mortgage company. Both choices have pros and cons that should be discussed with real estate professionals who have experience dealing with short sale situations.
If a homeowner decides that they do want to try another solution before letting the house go into foreclosure, they can choose to try selling the house through a short sale. A short sale is just like selling a home when payments are up to date. The homeowner chooses the real estate specialists, makes a deal with an interested buyer and works together to get the house sold. The only difference is that if the homeowner is still behind on their payments, the mortgage company must agree to the short sale price before the deal is finalized.
For most homeowners in trouble with their payments, foreclosure is the last resort. A foreclosure has a significant impact on a person’s credit report vs a short sale, and it can take years to regain a good credit score. Foreclosure also puts restrictions on when a person can buy another home, since most lenders will not approve them for financing. This wait is anywhere from five to seven years. Those who choose a short sale may have trouble finding a lender if they were behind on their payments, but could possibly buy another house once the first one is sold. Short sales are also not required to be disclosed, but a foreclosure must be disclosed when looking for another mortgage.
Homeowners considering these two options should ask plenty of questions to short sale experts, legal and tax professionals before making a decision. Every situation is different, and the experts will be able to guide homeowners to the best decision for their current situation. You can also visit our blog for more information.