As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially. The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner.
Here’s a brief overview.
A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.
On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.
On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.
After foreclosure, the bank can sell the home in a foreclosure auction. For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.
THINGS TO KNOW:
You have options! If you are unable to afford your mortgage but want to keep your home, contact your Mortgage Company immediately! They know that life happens (e.g. divorce, job loss, medical emergencies, etc…) so they’ll take your situation into consideration and help you determine the best option to save your home.
If you need to sell the house but you owe more than what your house is worth, your mortgage company might allow a “Short Sale.” A REALTOR® or a Real Estate Attorney can help you navigate the listing and selling process.
Don’t know if your mortgage balance is more or less than the Fair Market Value (FMV)? Contact a local REALTOR® for a Comparative Market Analysis (CMA). He/She will gather current market statistics to calculate your current FMV.
If you’re in the Greater San Antonio Area and would like further assistance, fill out the following form and I will contact you within the next 24 hours. For immediate assistance, call or text me directly at the number listed below!