Are you having trouble with your mortgage payments, but hopeful that there may be an alternative option to foreclosure? You could consider going for a short sale arrangement on your home.

Unsure where to begin? Here are the essential differences between short sale vs foreclosure to help you get started.

When are these used?
A foreclosure can take place when a borrower defaults or is unable to complete mortgage payments. A short sale also occurs when a borrower is unable to pay, but only on the condition that borrower owes more than the home is worth, and has no equity to sell.

Who initiates action?
A foreclosure is initiated by the lender while the homeowner initiates a short sale. However, it should be noted that a short sale proposal is still subject to the lender’s approval before it is granted.

How do they impact your credit score?
With a short sale, there is a smaller negative impact reflected on your credit score. Foreclosures result in a greatly diminished credit standing, and remain on your credit history for over 5 years.

What happens to the home?
When you choose the short sale option, you can either continue to pay off your mortgage at a lower rate, or have a buyer assume the mortgage. With a short sale, you can be in charge of selling the home. With a foreclosure, the lender has the right to evict the tenant, and assumes ownership of the home. He or she can then put the home up for auction or sale.

When can you purchase a new home?
After a foreclosure, you will need to wait for 5 to 7 years before you are eligible to purchase another home. On the other hand, the waiting period after a short sale is only 24 months.

If your goal is to preserve the integrity of your credit, then consider requesting a short sale.
On the other hand, if you really are unable to fulfill your mortgage payments or are not qualified for a short sale agreement, then a foreclosure is what you are faced with.

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Do you have general real estate requests or need a Realtor to represent you in South Lyon, Novi, Farmington Hills, Livonia, Northville, Plymouth, or in any other surrounding Oakland County area? Feel free to contact me.