Short Sale vs. Foreclosure
Defaulting on your monthly mortgage payments leads to the either foreclosure or short sale. Both the processes have an adverse effect on your credit score.
Compared with the foreclosure process, the short sale process is always considered to be a better option because it gives the owner some time to make alternate arrangements to pay their mortgage. Additionally, house owners can also seek the government’s help if they do not want to face the consequences of a foreclosure.
Home foreclosures do not allow the owner to be a part of the sale whereas they have complete control when it comes to short sales. The downside is that most lending institutions do not agree to short sales because they lose out on an opportunity to sell the house at the price that they want for it.
A short sale specialist may encourage the owner to sell the house for an amount that is lesser than what they expect from the market. In spite of this, foreclosure listings are easier to find when compared with short sales listings. Depending on your credit report, you can avail a new mortgage only 5 years after the foreclosure process while the same can be availed in a time period of just two years with the help of a short sale negotiator.
It is highly recommend that owners who fall behind in their payments speak with their lender as soon as possible to discuss a short sale with them before it is too late.