Every year, many people choose to take out a loan when purchasing a property. It is not surprising, as it can be quite difficult to buy a house on your own in this economic situation. Most individuals would have to collect money for years, maybe even decades until they are finally able to become homeowners. Some of them are patient enough to wait that long, while others prefer not waiting for years.
If you don’t want to borrow money from the lender, and desire to accomplish the dream of owning a home on your own, without any help, it is understandable. Many people prefer saving up money for years rather than borrowing it from a bank. On the other hand, if you lack patience, you should apply for a loan. Sometimes, individuals just don’t want to waste money on paying rent every single month when they could take out a loan and pay its monthly expenses. For them, it is better to spend cash on a daily basis and have something in return after several years, than to have nothing at all. That’s why they decide to visit a bank or lender and request a loan.
If you want to become a homeowner, taking out a loan is a suitable option. However, some problems can occur. That’s why it would be wise to make sure you can pay your debt back before applying for credit. After a while, some people experience financial troubles because of the loss of job, reduced income, illness, or various other reasons. These factors might lead to them to not be able to pay the loan back. When a person gets behind on mortgage payments, two options exists – to sell the property short or face foreclosure. This explains short sale vs foreclosure.
How does a short sale work?
If you are having trouble paying back the loan, you should consider a short sale. It is the process of selling your house short. In other words, you can make a deal with your lender to write off your debt in exchange for your property. Your lender will accept less than what you owe and become the owner of your home. It is a quite popular solution among individuals who want to sell their house, but their debt to the lender is higher than what their property is worth. A short sale requires an agreement between the homeowner and the lender.
What is the difference between a short sale and a foreclosure?
The first difference is timing, as a short sale can be arranged before a property owner goes into foreclosure. The second thing in which these two options differ from each other is that short sale is voluntary, as opposed to foreclosure. You just can’t choose whether you want to go into foreclosure or not; it is not up to you to decide. Also, if you pick a short sale, you will have all the control over the entire process. Another difference is the impact on your credit rating. Foreclosure has a greater influence on your credit score in comparison to short sale.
It is always best to avoid foreclosure. Save your credit rating by choosing a short sale over a foreclosure. Contact a short sale agent today if you are in risk of losing your home.