“Foreclosure vs Short Sale”
For the Savvy Homeowner
Foreclosure vs Short Sale with The Real Estate Blvd
If you’re a homeowner, your most important financial obligations are your monthly mortgage payment. This payment should be your top financial priority.
If you fall behind on your monthly mortgage payments, the lender has the legal right to foreclose on the loan. With this in mind, the lender can force you to move out. In turn, then they can sell your home to pay off the loan. Right?
You risk losing your home, whatever money you have invested in it. This includes the down payments, closing costs, and all the monthly payments you have made. Your good credit is at stake as well.
Once a lender initiates foreclosure proceedings, legal fees may also be added to what you owe on your mortgage. Even worse, if your property has dropped in value since you bought it, the foreclosure sale may not bring a high-enough price to cover your outstanding balance. Ouch!
If this occurs, the lender in some states, may have the right to obtain a deficiency judgment and require you to repay the remaining outstanding balance.
So what is a Short Sale?
In a short sale, the lender allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the mortgage.
The short sale must be an arm’s length transaction with the net sale proceeds being applied to a discounted mortgage payoff acceptable to the servicer. In other words, the home will be sold for less than what you owe if the lender approves. Therefore, the servicer accepts the short payoff in full satisfaction of the total amount due on the first mortgage.
In the End…
Buying a home takes time and hard work. It is a great financial investment and ff you ever find that you are unable to keep up with your monthly payments, be sure to contact us immediately. We can discuss the situation and try to work out a solution.
It is essential that you protect this investment by following a regular home maintenance program and developing a sound financial management plan. If you cooperate with the lender, you may be able to avoid foreclosure and the loss of your home.
As you pay down your mortgage over time and the market value of your home increases, you will have the satisfaction of knowing that you are building up substantial equity for the future.
If you or your loved one is falling behind on your payments, call us to set up a free consultation with our real estate attorney. Good luck and we hope you will enjoy the many benefits of homeownership!
LICENSED REAL ESTATE BROKER
Office: (321) 250-3463