Homeowners desperately explore various options when they fall delinquent on their mortgage payments. If they want to keep their home, they can consider many foreclosure alternatives such as loan refinancing and modification. But in some situations, they have to either let their lender take away their homes or sell to a third party buyer before the foreclosure process begins. These are two distinctive options that can have different financial consequences.
Here are a few important things that you should be aware of:
What is short sale?
Let’s assume that you owe your lender $500,000 and the current market value of your home is $480,000. So even if you sell your home, you won’t be able to pay off the mortgage amount in full.
In this situation, you can approach your lender and ask them to consider a short sale. If they approve the short sale, they will accept $20,000 less than the amount of mortgage that is owed. You won’t owe the bank anything even if the home is sold for less than the mortgage amount. Your loan will be settled. It’s called a short sale.
What is foreclosure?
The foreclosure process begins when you have missed a few mortgage payments and receive a notice of default. Once you receive the notice, your home is in the pre-foreclosure stage. You can explore various foreclosure alternatives to keep your home, but if you don’t pay your dues, your lender will take it away. Foreclosure process is judicial in New York so your lender will need to obtain an order from a court to foreclose upon your home.
Once the foreclosure process is complete, your lender will repossess the property and sell it in an auction or through the traditional home selling process to recover the debt.
Both foreclosure and short sale will damage your credit score. The best alternative is to sell your home even before you receive a notice of default from your lender and your home is in foreclosure.
E2F Properties is Westchester County’s premier real estate redevelopment company. We would love to help you sell your home anywhere within Westchester. If you have a home that you need to sell or if you know of a property in your neighborhood that you think needs renovation, please call us to discuss your options! We are a solutions company and are available to help! (914) 999-2293