Most of people don’t know what a short sale is… and what is a foreclosure? …let alone that a short sale is better than a foreclosure! I will define both of the terms just for your convenience so you can follow the difference between the two.
What is a Short Sale?
Short sale is a term that stands for selling the home less than the mortgage-payment. It is called short sale in common words or colloquial language. Let us explain short sale with an example: the seller sells his home for $1000 but the credit is $1200 on the mortgage.
What is a Foreclosure?
On the contrary, foreclosure is also a term that stands for selling the mortgage home if you fail to pay the mortgage payments in time. In this situation the bank seizes your house and puts for auction among the realtor or public and the borrower has to evict the house at any cast. This process is called foreclosure in common term.
As the heart is to body just like short sale is to mortgage. When a person get loan from any bank he or she will have to mortgage property against the load and after this the load is issued for the borrower for a limited time with monthly installments. If the borrower cannot pay the monthly installments within time limit even after the bank reminder so in such situation the bank is authorized to sell the mortgage house in auction.
If the borrower cannot pay the mortgage payments the bank will sell the property thus the house owner will have to evict the house and thus the house owner will be disgraced among the public and relatives and the ego of the property owner will injure surely. To avoid such situation short sale is better than foreclosure.
Short sale is a deal with the bank and the property owner and when the mortgage property owner agrees to accept the amount less than the mortgage amount it mean both the parties agree to a short sale in a cordial manner. In such compromise the bank gives discount according to its own will and wishes but it may not be accepted by the borrower.
For instance: if the property value is less than the amount of mortgage, this situation will create a troublesome situation for both of the parties: the bank and the property owner. In such situation short sale is better than foreclosure and short sale may dissolve the present dispute between the bank and the property owner.
The difficult situation can be tackled by a professional property dealer; real estate dealer will advise you to sell the property on affordable amount to avoid tax problems and consequences. Thus the mortgage property own may get rid of bank problems.
Why is Short Sale Better?
In this condition wisdom advises the property owner to follow the short sale process because it safe and sound and thus the borrower will be able very soon to get a new home to line in. But if the process of foreclosure process is happens the owner will not be able to get new property for at least 7 years and its spot will remain on the borrower’ back: A Bank Defaulter.
That is why in most of areas the price of property is down due to foreclosure leave a bad effect on the real property holders. Foreclosure process makes men homeless and injures the house owner’s ego among the public and relatives. Keeping in mind the whole situation, short sale is better than a foreclosure. Sell the property for the amount less than the bank mortgage amounts saves your honor and dignity in the eyes of public and relatives. Yea, if the mortgage property so sold in auction loses money.
Mortgage process starts when the money borrower neglects the bank reminder to pay the installments in time. The mortgage process is acted upon after 90 days’ notice. After this the is authorized to sell the mortgage property as the bank likes. In such situation the bank will have to accept less than the mortgage amounts.