What Is A Foreclosure In Benbrook, TX?
Short sale versus a foreclosure. What’s the difference in Benbrook? Whether you’re a buyer or a borrower/seller, a short sale and foreclosure present different advantages and difficulties. This article will talk about the difference between these two to help you pick your best option.
You must have heard of foreclosure or seen this sign while driving to work, and maybe you are wondering, what is a foreclosure.
“A foreclosed home is one in which the owner is unable to make his mortgage loan payments, and the bank repossessed the home” (source). If you fall behind on your mortgage payments, your lender has the right to foreclose on your house to recoup the money you owe them.
The foreclosure of property happens when a borrower defaults on their mortgage payments. The loan institution will take over, and the borrower gets evicted. These properties are then auctioned or sold through more traditional techniques such as real estate brokers. A foreclosure can damage your credit score, making it difficult for the borrower to obtain a mortgage for several years to come.
Depending on the state that you are in, foreclosure can work in different ways. Check out the foreclosure process information over here at the HUD Government website.
What Is A Short Sale?
In a short sale, the borrower still owns the property.
A short sale is a real estate transaction in which the proceeds from the sale of the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens in full. Therefore, the lien holders agree to release their lien on the real estate in exchange for a lower payoff than the debt owed. For example, homeowners may sell their homes for $125,000 while still owing $175,000 on their mortgages. The difference of $50,000 (minus any closing costs and other selling charges) is the shortfall in this case.
A third party (not the bank) purchases the property, and all proceeds go to the lender. The lender has two options: forgive the outstanding sum or pursue the homeowner through a deficiency judgment, which forces the homeowner to pay the lender the difference in whole or in part. Remember, though, that it is up to the mortgage lender to approve a short sale.
A short sale is an option that borrowers and lenders have agreed to in some situations. It occurs when a home gets sold for less than the outstanding mortgage sum. As a result, the borrower may or may not still owe the unpaid balance (also known as the deficit).
This option usually takes some time because several different lending organizations may own the mortgage. All parties with a stake in the property must agree on the terms of the sale. A deal could fall through if even one lender does not agree.
Short Sale vs Foreclosure – Your Options
While both choices have consequences, a short sale has a lesser impact on the borrower’s rating. For example, a foreclosure can lower a borrower’s credit score by 300 points or more, while a short sale can only decrease by 100 points.
Foreclosed borrowers are typically ineligible to purchase another property for 5-7 years with a regular mortgage. Meanwhile, a short-sale borrower can buy right away in certain circumstances.
Many Americans continue having difficulty making their monthly mortgage payments as the economy is recovering from the 2008 crisis. For a borrower having problems paying their mortgage on time, the choice between short sale vs foreclosure, getting repossessed, and commencing a short sale (or a third alternative, selling your Benbrook house fast) is an easy one.
Lenders are sometimes ready to cooperate with debtors to execute a short sale to avoid foreclosure.
Lenders are often prepared to cooperate with borrowers to accomplish a short sale to avoid the fees and foreclosure time commitment.
Our suggestion is always this.
- Talk to your lender about how they might be able to help you with your loan. We provide this service to point you in the proper direction if you have problems with your lender. Contact us using our Contact Us page, and we’ll talk about your issue.
- Attempt a short sale or other programs offered by your lender that forgive a portion of your loan, and create a new or more affordable monthly payment to get you back on your feet.
- If the bank isn’t willing to work with you very much, your best option may be to sell your house. Work with a local real estate house buyer service like TMC Property Solutions to sell your house fast and get an all-cash offer. We can look at your situation and make you a fair offer on your house within 24 hours. Just fill out the short form on our website over here >>
- Foreclosure. The worst-case situation is to let the house go into foreclosure as a final resort. It will ruin your credit, and you may still owe money to the bank after the foreclosure completes.
By knowing your options, you may be able to dodge a significant impact on your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit makes that extremely difficult for 5-7 years, so a short sale can be the better option if you have the opportunity.
Have a pending foreclosure? We want to make you a fair all-cash offer on your house.
Give us a call anytime at (817) 550-5069 Opt# 1 OPT #1 or fill out the short form below today! >>
By now, we hope you understand the difference between a short sale vs foreclosure. Feel free to call TMC Property Solutions at (817) 550-5069 Opt# 1 or send us a message to learn more.
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