Whether you’re a buyer or a seller, it’s crucial to understand the differences between a short sale and foreclosure in Stockton. At a glance, a short sale is the “last stop” before a borrower faces foreclosure. If approved by a lender, it allows them to sell their property for less than the outstanding mortgage – which hopefully lets lenders forgive any existing debt the borrower may be facing. Foreclosure occurs when a borrower fails to meet mortgage payments, leading to a lender taking possession of the property. Let’s take a deeper look at short sale vs foreclosure.
Foreclosure in Stockton
Foreclosure is never ideal. It can have a negative impact on your credit score and can make it very difficult to obtain a mortgage on a future home. As explained above, borrowers face foreclosure when a lending entity seizes their homes and evicts them after they stop meeting their mortgage payments. The lending institution typically tries to sell the house at an auction or with real estate agents in an attempt to make back the money that the borrowers failed to pay them.
Short Sale in Stockton
Short sales are typically last-ditch efforts made by borrowers to avoid foreclosure. It still has its ramifications (you may need to wait a couple years before getting another mortgage), but it’s much less damaging on credit scores than being evicted from a property by a lending institution. The goal here is to make a deal with the lending institution to allow the borrowers to sell a house for less than the amount owed in the mortgage. The unpaid balance (often called the deficiency) may or may not still be owed by the borrower.
As you can imagine, this option will take a bit more time, but at least it’s voluntary. Things can get especially hectic it multiple lending institutions own the mortgage. In that case, all parties have to agree on terms of the sale or the process can’t move forward.
Short Sale vs Foreclosure – Your Options
Now let’s weigh short sale vs foreclosure. While both options can an effect on your ability to obtain a mortgage in the future, a short sale is typically less damaging. Borrowers who are forced into foreclosure may be ineligible to purchase another home for around seven years (with a traditional mortgage), whereas a short sale may make the borrower ineligible for around two years, and in ideal circumstances, allow purchases to be made immediately.
Our suggestion is always this.
- Talk with your lender and see what they can do for you. If you aren’t sure where to start, or if you run into issues with your lender, you can reach out to our team at MCB Homes Inc. on our contact page.
- Try to short sell or take advantage of other options your lender gives you. Short selling can forgive part of your loan and help you get back on your feet, but if that isn’t an option, there might be other useful options that your lender can provide.
- Sell your home to a home buying company. If a lending institution isn’t working with you very well, you might just want to sell your home. You can use a service like MCB Homes Inc. to get a fast cash offer for your home in as-is condition. Just fill out the form on our website over here.
- Foreclosure. As an absolute last resort, the house can fall into foreclosure. Do everything you can to avoid this option – it will have serious repercussions.
Hopefully, this guide gave you a clear idea about short sale vs foreclosure and what options you have at your disposal. If you act soon, you might be able to avoid a situation that can ruin your credit score and bar you from obtaining a mortgage.
Have a pending foreclosure? Hopefully, this clarified short sale vs foreclosure. We’d like to make you a fair all-cash offer on your house Give us a call anytime at (209) 400-6500 or fill out the form on this website today!