A foreclosure and short sale are the same right? You would be surprised how many people think this is true.
What is a Short Sale?
The simple answer is when you sale a home in which the amount owed to the lender(s) is more than the amount that the home can be sold for. Instead of the owner of the home having to pay for the difference to complete the sale, the home sale is negotiated through the lender(s) in which they agree to accept less than the amount owed to satisfy the loan allowing the home to be paid off short.
Does my lender have to approve my short sale?
No, it is up to the lender to approve. If you have more than one loan on your property and the first lender approves a sale but the second lender does not, you cannot short sale your property. All lien holders have to be in agreement to have a successful short sale.
Why would a lender not approve a short sale?
Loans in most instances are bought by investors. The investors have to net a certain amount when they take a loss on the property. If the investor can get more at auction to limit their loss it is better for the investor to foreclose on the property.
Are short sales and foreclosure the same thing?
No, a short sale has less of an impact on your credit than foreclosure and in most cases if you maintain your credit, you can purchase a house again in two to three years.
A foreclosure has more damaging effects, not just on your credit, but if you apply for a job or try to get a loan in the future, you might have to answer if you have ever had a foreclosure on a loan application. A foreclosure stays on your credit for seven years.
The government has free resources for distressed homeowners. The Making Home Affordable website will answers many of your questions. This program will answer questions about Refinancing and Loan Modification. There are a lot of foreclosure rescue scams and that is why the government is providing free help and advise from approved HUD counselors.
You do have options that can help with your housing situation. If you find yourself in distress the first thing to do is to call you lender. Explain to your lender your situation and talk with them about doing a loan modification. If your loan modification is declined your next option is to find a local real estate agent who specializes in distressed properties. Working with someone who has experience will yield more results than someone who has no idea what they are doing.
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If You Do Not Buy a Home Now, You Will Hate Yourself Later
Home prices have fallen to historic lows and current economic data has shown that most local markets are starting to show signs of stability. It is a buyers' market and if you are serious about purchasing a home now is the time to act.
Why is a Short Sale Better?
Having a REALTOR® who understand short sales and foreclosures goes a long way. Do not throw in the towel after the first round with the bank loss mitigation department. The first round can knock you out, some get up and go for the second round and make some progress, but a majority of homeowners quit after their loan modification is denied. This is the point where the homeowner has given up and is ready to walk away from the home.
