Navigation Menu+

Foreclosure vs short sale

Foreclosure vs short sale

I have spoken with many people lately who have a bit of a dilemma: their income went down due to loss of job or reduction in hours so their mortgage payment is higher than what they can handle. The obvious choice would be to sell it and buy or rent something with a smaller payment however because of the decline in housing prices there is not enough equity to sell it.

The person in this situation might be embarrassed about it (although they shouldn’t be) and not reach out for help ever or too late. In fact, 57% of the owners of homes that have been foreclosed never contacted their bank or a realtor.

One option for people in this situation is a short sale. A short sale is when the bank is paid short of the full amount that they are owed. Of course, the bank doesn’t like to take less than they are owed, but they will in order to avoid taking the home back through foreclosure. There is a rumor that short sales are as damaging to your credit as foreclosures. They certainly aren’t great for your credit, but it is much better than foreclosure. Consider this chart:

Screen shot 2009-12-16 at 6.42

If this is something that strikes a cord with you, or if you know someone in a tough situation, please don’t wait!!

My team is uniquely qualified to guide you through this time for a favorable outcome. We look forward to hearing from you!