Top Benefits of Short Sale Over Foreclosure
Decisions & More Decisions: Short Sale vs Foreclosure
With the fall of the housing market and a variety of other reasons, you might be noticing those piling up mortgage bills that you haven’t been able to pay off. In fact, it’s starting to look like you will never be able to rebound and are starting to reach foreclosure. But there are other options than falling into the stigma of foreclosure.
Short Sale is one option to strongly consider, and is often considered the savior from foreclosure. Basically, a short sale is where the bank allows you to sell the home for less than it’s worth, in hopes of avoiding the total loss of finances in a foreclosure. However, some think that letting themselves slide into a full-on foreclosure will be better because their mortgage debt is forgone. But this isn’t necessarily true and going into foreclosure will have a longer-lasting cost to you and your life.
Here Are Some Benefits Of A Short Sale Over Foreclosure:
1. Protects Your Credit
From a lender’s perspective, it’s better to retrieve a portion of the mortgage loan than to lose all of it. This is why banks and lenders will settle for a short sale over a foreclosure. Both you and the bank will be in a better position when everything is finished. And if you slide into foreclosure, it will permanently damage your credit ratings, preventing you from being able to buy a house for several years (not to mention other things). A short sale will hurt your credit rating, but not as much as a foreclosure – since you’ll be paying off a part of the debt with the sale of your home.
2. It Saves You Money
According to the U.S. Congress Joint Economic Committee, the average cost to a homeowner going through foreclosure is $7,500 (not including additional costs during the lengthy process). And if you aren’t able to pay off your mortgage debt, it might lead to bankruptcy, causing you further costs. However, a short sale could reduce the amount a bank may be looking to recoup from you – since you’ll be selling your house to make up the difference.
3. You Have More Control
When your house is put on foreclosure, you never know when the bank will sell the house. And once they do, you have to move out in a moment’s notice. The fear of never knowing when can have a negative effect on your mind and will create unimaginable amounts of stress. With all the paperwork and notices coming in from the bank, the last thing you want is to not have control over your own home living. A short sale will allow you to play a more active role in the selling process between the agent and lender.
The Peace of Mind From a Short Sale
From the whole buy-sell process, you’re going to be surrounded by a whirlwind of stress and activity. But the pressure of a short sale is nothing compared to that of a foreclosure. The impact on your credit rating is less than a foreclosure’s and the risk isn’t as high. Putting your home up for short sale will help you avoid legal action from the bank and the lengthy, laborious foreclosure process. So lessen your burden and place yourself in a more positive position. Do a short sale rather than going into foreclosure.
For more information on the Short Sale Process, read these articles:
- How to Short Sell Your House
- How to Write a Short Sale Hardship Letter
- Foreclosures & Short Sales in Jacksonville
- The Best Time to Sell as Short Sale
And to learn more about the short sale market, search: