If you are having to decide whether to Short Sell or let the bank Foreclose on your home, it’s pretty obvious that times are tough. You’re having to make some big decisions that will affect your future for a significant amount of time. Making the right choice for yourself and your situation will be key. The best place to start in knowing what is right for you is to understanding the difference between a short sale and a foreclosure.
To keep it simple, it means the act of selling short. In real estate terms it means that the borrower owes the lender more money for a property then they are able to get by selling it to the open market. For example, say you owe $300,000.00 for your property but the market says the property is only worth $250,000.00. This means you would be “short” $50,000.00 that you owe. Unless you have that amount laying around and are willing to pay the bank the $50,000.00 that you are short, then you are going to need to ask the lender if they are willing to allow you to sell your property as a “short sale” and forgive you the $50,000.00, plus closing cost that you owe.
This is the process of taking possession of a mortgaged property as a result of the mortgagor’s failure to keep up mortgage payments. If you can’t make your payments, the bank has come to take back the property to foreclose on it. This will mean you need a new place to live – more than likely sooner than later. Typically a big life event or change is in process, and this situation is not ideal.
So how does a short sale or foreclosure affect you long term, and what does it mean with regards to home ownership and credit in the near future? What about long term?
Below is a chart that shows the “basics” of the amount of time either of these options could affect you. Lending rules change regularly and everyone’s situation is different, so for exact information about how either of these may affect you, we recommend consulting with not only your realtor, but a lender too.
All in all, you really don’t want to have to face either of these situations, but as we all know, life happens. So, if you find yourself in a tough situation, it is key to contact a Realtor immediately and ask for some direct guidance on how to navigate what lies ahead.
The JS Realty Team specializes in short sales and we have a proven track record of success! If you or someone you know needs help, contact us! We are happy to help in any way that we can.
The JS Realty Team – not only serving Brambleton, serving all of Northern Virginia