What is the Difference between a Short Sale vs. Foreclosure? What does it mean when a homeowner is "short" on the closing?
When a borrower owes an amount on the property that when combined with closing costs and commissions, is higher than the current market value. What is a Short Sale? - When a homeowner is authorized to sell for less than what is owed on the mortgage.
- When the lender authorizes or accepts the sales price as a payoff.
- When the seller avoids foreclosure and many times they can also avoid a judgment.
- When the seller avoids a negative report, by the lender, to the credit bureaus.
The seller won't get any money at closing, but they will avoid the emotional toll a foreclosure can cause. The negotiations include a favorable wording for the forgiven debt on the mortgage that can help the recovery of the homeowner.
A short sale occcurs when:
A negotiation is entered with the homeowner's mortgage company or companies to accept less that the full balance of the loan at closing. A buyer closes on the property and the property is sold "short".
A foreclosure occurs when:
There is a legal proceeding by the lien holder in which they take back the property in order to recover the amount that is owed by the homeowner.IMPORTANT TIP! The term Short Sale...A "Short Sale" is relatively new phrase to many homeowners, but this type or sale has been part of the real estate market for many, many years. Most Realtors® are not up-to-date with the process and that has caused much confusion in the community with homeowners and even real estate agents. If you are talking with another real estate agent...ask them if they have this designation. I'm a "Certified Distressed Property Expert," and have earned this designation through extensive training.  Common Questions:
I've already received my foreclosure notice, is it too late for a short sale? The short answer is no, but there are a few variables that can affect the foreclosure timeline. A qualified Realtor or better yet, a Certified Distresses Property Expert can help you extend the foreclosure timeline up to 6 months and in many circumstances up to 7 or 8 months. A sale of a home can be done and approved up to the day of the bank sale or auction of the home.
I haven't missed any mortgage payments; can I still do a short sale? Typically the lender will not consider a short sale if there have not been any missed payments but can be overcome if we can show a compelling reason why the payments have been made but the payments are not sustainable into the near future. We would need to show if the payments were made with your credit cards, by borrowing from family members or even if the money came from retirement accounts, as an example. This will not guarantee the lender will accept but there are instances where they have done so.
How do I pay the Realtor commissions, taxes and other expenses associated with a home sale? In December 2007, President Bush signed into law the Mortgage Forgiveness Debt Relief Act which eliminates the income tax that used to be levied on the forgiven portion of the primary home's sale. The tax is still in force for second homes and investment properties How does a short sale help me? It helps you avoid an emotionally draining foreclosure process. Avoiding a foreclosure with help save your credit. Typically a foreclosure will drop your credit score up to 200 points per loan. Avoid having a foreclosure on your credit report anywhere from 7 to 10 years, which affects your future purchasing power and interest rates.
It could help you avoid a "deficiency judgment" from the lender after the foreclosure as they try to recuperate their loses.  Helping families and individuals one home at a time!
All inquiries will be held in strictest confidence! Don't wait. Get the help and options you need to make an informed decision. Contact me today! Also, for more information be sure to visit www.com.ohio.gov/SavetheDream/ , Ohio's Foreclosure Prevention Effort Website. |