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

Whether you’re a buyer or a borrower/seller, a short sale, and foreclosure each present different advantages and difficulties.

What Is A Foreclosure In Fort Myers, Florida?

In simple terms… “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 stop making your house payments… your lender has the right to foreclose on your property so they can attempt to recoup their money that was lent to you. 

A home is typically foreclosed on when a borrower fails to make mortgage payments. The lending institution assumes ownership and possession of the property, evicting the borrower. These properties are then sold at auction or more traditional means utilizing the service of real estate agents. A foreclosure can damage the credit rating of a borrower, and make it very difficult to obtain a mortgage for many years.

Depending on the state that you live in… a foreclosure can work in different ways. Check out the foreclosure process information over here at the HUD Government website.

What Is A Short Sale?

In a short sale, the home is still owned by the borrower.

The definition of a short sale is… “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 is an option agreed upon by borrowers and lenders. In a short sale, the home is sold for less than the outstanding balance of the mortgage. The unpaid balance (known as the deficiency) may or may not still be owed by the borrower.

This option typically takes some time, as a few different lending institutions may own the mortgage. All parties who have a stake in the property must agree to the terms of the sale, and a potential deal could fall through if even one lender doesn’t agree.

Short Sale vs Foreclosure – Your Options

While both options can have ramifications, a short sale often has less of an impact on the borrower’s creditworthiness. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points.

Borrowers who are foreclosed on are often ineligible to purchase another home for 5-7 years with a traditional mortgage, where under certain circumstances, a short sale borrower can purchase immediately.

As many Americans struggle with an economy that has yet to completely recover from the 2008 crash, folks are having a hard time making monthly mortgage payments. Choosing between being foreclosed and initiating a short sale (or a 3rd option…  selling your Fort Myers house fast  )is an easy choice for a borrower having troubles paying their mortgage on time.

Sometimes, lenders are willing to work with borrowers to complete a short sale, to avoid the fees and time-consuming process of conducting a foreclosure.

Our suggestion is always this.

  1. Talk with your lender and discuss ways that they can work with you on your loan. Initiating a conversation allows you to explore potential solutions and negotiate terms that can alleviate financial stress. By discussing your circumstances and demonstrating your commitment to fulfilling your obligations, you may find that your lender is willing to offer assistance such as restructuring the loan, adjusting repayment schedules, or providing temporary relief options. Our service aims to support you throughout this process, offering guidance to navigate discussions effectively and advocate for solutions that align with your needs and financial capabilities. Remember, proactive communication fosters cooperation and increases the likelihood of finding mutually beneficial arrangements with your lender…. just reach out to us on our Contact page and we’ll discuss your situation.
  2. If you’re facing financial strain and struggling to keep up with your mortgage payments, exploring options like a short sale or other assistance programs offered by your lender can be crucial steps toward regaining stability. A short sale involves selling your property for less than what is owed on the mortgage, with the lender agreeing to accept the proceeds as payment in full, thereby forgiving the remaining debt. Additionally, many lenders offer various assistance programs aimed at helping homeowners in distress, such as loan modification programs that adjust the terms of your loan to make monthly payments more manageable. These programs can potentially lower interest rates, extend the loan term, or even reduce the principal balance. By engaging with these options, you can pave the way for a more sustainable financial future and alleviate the burden of overwhelming mortgage debt, allowing you to focus on rebuilding your financial health and getting back on your feet.
  3. If the bank isn’t willing to work with you very much… your best option may be to sell your house. Work with a local real estate house buyer service like Sell My House Now USA to sell your house fast for an all-cash offer. If you’re interested we can look at your situation and make you a fair offer on your house within 24 hours. Just fill out the form on our website over here >>
  4. Foreclosure. Last resort is to let the house fall into foreclosure. This is the worst possible scenario. It’ll harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished.

By knowing your options, you may be able to dodge a significant impact on your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale can be the better option.

Have a pending foreclosure?  We’d like to make you a fair all-cash offer on your house. There are no commissions, fees and no obligation whatsoever. No repairs, no commission, no fees. No appraisal needed. No financing contingencies. Learn about our hassle-free closing process. Sell My House Now USA works with home owners throughout Fort Myers, Cape Coral, Lehigh Acres, and more. 

Give us a call anytime at (239) 360-3176 or
fill out the form on this website today! >>

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