subject: Why A Short Sale Is Better Than Foreclosure [print this page] There are a number of disadvantages with foreclosures
1. It throws the homeowner out of their homes and the homeowners face shame and financial hardship.
2. This also makes it difficult to find rental properties.
3. The credit score of the homeowner can drop by as much as 300 points. This makes it extremely difficult for them to apply for further loans. Moreover even if they do get the loan, they are charged a very high rate of interest by the lenders.
4. Prospective employers also check the credit report and are wary of offering such employees jobs.
5. Foreclosure also makes it difficult for the homeowners to apply for a mortgage loan 7 10 years after the foreclosure.
6. Banks and lenders can also pursue the homeowner under deficiencyjudgment and this can be quite difficult for the homeowner, especially since they dont have any money to begin with.
7. Foreclosure is a public affair and can be extremely painful and hard for the homeowner and their family. The foreclosure auction is extremely traumatic, where the highest bidder for the home will get the home. After the bidding process is complete, the homeowner will usually have 7 30 days to move out
In case of short sale, the advantages to the homeowner are many
1. The short sale is reported as a debt settlement and not as a foreclosure.
2. Even though the homeowner has to leave their home, they are usually given some relocation expenses such as $3000 under HAFA or by the lender. This enables them to take a rental property or relocate to a more affordable housing.
3. Further in most states, after the short sale is over, the homeowner doesnt owe the bank any outstanding due. This means that the mortgage loan of the homeowner has been settled in full. If the short sale has taken under HAFA, then the lender cant sue the homeowner in a court of law for the deficient amount after the short sale has taken place.
4. A short sale is usually like a normal real estate transaction where there is a buyer and a seller. The short sale event isnt done in full glare of the public but rather privately and this ensures that the esteem of the homeowners stays intact.
For those homeowners that are facing financial hardship, a short sale can be one of the best ways that they can avoid the foreclosure. Short sale is especially recommended for those that have underwater mortgages the value of their home is much lower than the mortgage loan that they have taken. Short sale can be conducted by the lender or it can also be pursued under HAFA that offers a number of benefits. Short sales can be conducted with the help of real estate professionals and agents that have experience in such matters. The permission of the bank / lender is absolutely important in case of the short sale. In fact short sale is also advantageous to the banks as they are able to recover a portion of their investment.
