Short Sale vs. Foreclosure: W/Your Brookside, Waldo or Red Bridge Home for Sale How Do You Determine Which is Best for You?
Part III
It was your dream home. The fenced yard, backyard deck, 4 Bedrooms, the huge Kitchen with an island and the perfect street with wonderful neighbors. Then, you lost your job. Your household budget was based on having 2 incomes. Money has run out, and you have decided that you must move out of your home to reduce your costs and be able to survive.
You have 2 basic choices:
1. Short sale (you sell your home & the lender accepts less than what is owed on it)
2. Foreclosure (the lender calls the note due, and forces you out of the house legally)
If your goal is to preserve your credit rating as much as possible, then you should try to avoid foreclosure at all costs. Of course, settling your debt for much less than what you owe with a short sale will have a negative impact on your credit rating.
If your pride will not let you just walk away because of the possible social stigma associated with a foreclosure, or your circumstances allow you the time, you may choose to try to offset the costs of the lender that made the loan to you in good faith as much as possible with a short sale. The bank may not lose as much money (as with a foreclosure) since it won’t incur a lot of costs involved in a short sale (attorney fees, property maintenance and repairs, loss on the loan, etc.). While you still live in the house, it is protected from the vandalism that vacant houses are subject to. Some of the property maintenance and repairs will be taken care of by you while you live there, too.
Another benefit of choosing to go the short sale route is that you can buy yourself some time if you've missed payments. Once find a buyer and submit a signed contract to the bank, the clock slows down for a while as they take the time to review your file (along with your most recent paystubs, take returns, bank statements, etc.) to see if they will approve your short sale.
You will also be able to qualify for another mortgage loan sooner with a short sale than with a foreclosure should you decide that you ever want to consider home ownership again.
While neither scenario is ideal, a short sale can be more beneficial for both the lender and you potentially.
Basic differences between a short sale and a foreclosure:
From the National Association of Realtors
So, if you live in the Metropolitan Kansas City areas, including Brookside, Waldo or Red Bridge and other South Kansas City neighborhoods and determine that you need to short sale your home, feel free to contact me to discuss your options, and see if it's right for you.
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