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Short Sale Versus Foreclosure - Which Is The Best Choice For Your Situation ?

Homeowners who are struggling financially, often have an important decision to make in terms of their home.

When confronted with the possibility of their home going into foreclosure, many people could decide on a short sale rather than a loan modification.

What Is A Short Sale?

A short sale is if you happen to sell your home for less than you currently owe your lender. In order for the sale to take place you must get your lender to let you do a short sale. Naturally trying to convince a loan company to take less than they are rightfully owed can be tough.

If you want to talk to your lender with the plan of doing a short sale, you probably a better chance of getting them to agree to allow you to proceed if you notify them as soon as you realize you will not be in a position to make your monthly loan payments. The more repayments you are behind when you talk to the lender, the less likely they are to agree to a short sale.

What Happens If A Home go Foreclosure?

Foreclosure arises when you default on your mortgage loan. When you stop paying your mortgage after a certain amount of time your loan provider will begin the foreclosure procedure. It usually takes up to a year to complete. Once the process is over you will be turned out and your home sold.

So Which Would You Consider? Short Sale vs Foreclosure

That will be determined by your current position. It may help to look at the pros and cons of each. Usually this is determined after a mortgage loan modification was rejected.

A short sale will badly impact your credit rating. But depending on how you pay other bills, you can restore your credit rating within an acceptable amount of time. You won't need to bother about being taxed for the amount realized from the short sale, because of the Mortgage Forgiveness Debt Relief Act 0f 2007.

A foreclosure, aside from losing your home, severely damages your credit rating for several years. In case you don't file either Chapter 7 or 13 to stop the foreclosure..your loan provider can get a judgement against you for all the unpaid home loan you owe. They can also sue you for their up front foreclosure costs.

If you should determine proceeding with either a short sale or foreclosure, make sure to have a professional to take care of the complexities involved with both.

If your lender agrees to allow a short sale ensure that you use a respectable experienced real estate agent. He or she must have a substantial experience in short sales. You want an agent who has managed short sales and he is aware of the entire process.

When it comes to foreclosure, check with an experienced bankruptcy attorney. If you're certain foreclosure is your only option, you need to have a lawyer to represent and help you take the most beneficial options available for you and your position.

Clearly when you consider a short sale vs foreclosure, you can immediately find out a short sale is a far better option than a foreclosure.

However, a short sale is really difficult to get a lender to agree on. While foreclosure is more destructive to our credit for a longer period of time, for many it is the only option they can take.

If you can, a great alternatives might be loan modifications.

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