Short Sale vs Foreclosure – What’s the Difference in Wichita?

Depending on if you’re a buyer or borrower/seller of the property, a short sale, and foreclosure each come with different positives and negatives.

What Is A Foreclosure In Wichita, Kansas?

A quick description… “A foreclosed home is one in which the owner is unable to make his mortgage loan payments and the bank repossessed the home” (source).  If you have become unable to make your house payments and have quit making payments all together… your home lender is legally able to foreclose on your property in an attempt to recover the funding that they lent to you.

Typically, a home is foreclosed on when a borrower no longer makes mortgage payments on their loan. The lender assumes ownership and takes possession of the property, this includes evicting the borrower. These recovered properties are then auctioned off and can utilize more traditional means with the service of real estate agents. Foreclosure will create negative impacts to the credit rating of the borrower, leaving the borrower unable to find financing and lending options for housing for a lengthy time, sometimes even many years.

Contingent on the state that you are located in… a foreclosure can be dependent on many local regulations. Make sure to check out the foreclosure process information listed at the HUD Government website to get all of the rules and regulations for your area..

What Is A Short Sale?

With a short sale, the home remains owned by the borrower.

The complete definition of a short sale is… “A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt” (source: Wikipedia)

In some cases, a short sale can be an option that must be agreed upon by the borrowers and the lenders. When going the route of a short sale, the house is sold for less than the reaming amount owed on the mortgage. The remaining difference of unpaid balance (known as the deficiency) may or may not leave the borrower owing money.

Using this option can take a good amount of time, considering that multiple lending institutions may have stake in the mortgage. All included parties that own portions of the property have to agree to the terms of the sale, and any potential deals could fall through if even one lender doesn’t agree to the terms of the short sale agreement.

Short Sale vs Foreclosure – Options You Have

When deciding whether to choose a short sale or a foreclosure, you should keep in mind that both options have ramifications. For instance, a short sale usually makes less of an impact on the borrower’s credit scores. Adding a foreclosure to your credit history could impact a borrower’s credit score by over 300 points, in contrast a short sale may only affect the credit score by 100 points.

When borrower are foreclosed on, the borrower is often not able to purchase another home for 5-7 years using a traditional mortgage, on the other hand, a short sale borrower can have the option to purchase immediately after the sale is completed.

It’s no secret that Americans struggle with the economy that still has not completely recovered from the 2008 crash; homeowners are having difficulty maintaining monthly mortgage payments. Deciding between foreclosure or initiating a short sale (or a 3rd option…  selling your Wichita house fast  )is an obvious choice for a home owner struggling to pay their mortgage on time.

Occasionally, lending institutions are inclined to cooperate with borrowers to complete a short sale, to evade the costly fees and elongated processes of proceeding with a foreclosure.

We will always Suggest that you follow these steps.

  1. 1. Contact your lender and speak with them about ways they may be able to work with you in regards to your loan. We provide services that allow us to help navigate you in the proper direction if issues arise when dealing with your lender… don’t hesitate to contact us via our Contact page and we’ll discuss your situation and what options you have.
  2. Attempt a short sale or other programs your lender may have that negates a portion of your debt, can create an updated, more affordable monthly payment allowing you the time and resources to get back on your feet, etc.
  3. If your lender isn’t willing to work with you… your best option may be selling your house. Consider working with local real estate house buying services like Sell Now Homes Wichita to sell your house fast for an all-cash offer. If you want to consider this option, we can review your housing position and make a fair offer on your house within 24 hours. Just fill out the form on our website over here >>
  4. Foreclosure. The last thing you want to do is let your home go into foreclosure. This is the last resort and worst-case scenario. There will be harm to your credit and not to mention that you could still be left owing money to the bank despite the foreclosure concluding.

With our help and knowing your options, you can avoid significant negative impacts on your credit score, giving you the option to purchase another home when your financial situation recovers. Remember that the effects of a foreclosure being on your credit report makes that option much more difficult for 5-7 years. So, if you have an option to, a short sale can be much more beneficial and less painful.

Have a pending foreclosure?  We’d like to make you a fair all-cash offer on your house.

Give us a call anytime at (316) 413-8314 or
fill out the form on this website today! >>

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