The Difference Between a Short Sale and a Foreclosure
Homeowners who are struggling to remain current on a mortgage and avoid mortgage default have a myriad of options. One of the most popular options that surfaced during the mortgage crisis is a short sale. What is the difference between a short sale and a foreclosure?
Basically, a foreclosure is ceasing to make mortgage payments, tax payments, or homeowner association dues. The bank then begins the process of acquiring the home. Once the process is complete, the mortgage holder no longer has legal rights to the home and is required to vacate.
A short sale occurs when a homeowner is underwater on the mortgage, and can no longer afford his or her mortgage payment. A homeowner then has the option to contact the bank to begin the process of being approved for a short sale, which means to sell the property for an amount that is less than what is owed on the mortgage. The bank makes the decision on the sales price based on formulas that they use to determine the value.
The good thing about both of these is there is plenty of mortgage assistance options out there.
How will these two options affect my credit?
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