Bankruptcy, Short Sale and Foreclosure
Despite the fact that many people know what the terms “short sale” and “foreclosure” mean (after all, they are very much in the news these days), there seems to be a lot of confusion as to what each means. means for the owner. the mortgage company and the buyer, and particularly when it comes to which option might be best for a borrower facing a mortgage he or she can’t afford. These are some of the basic concepts and some prevailing myths that also need to be debunked.
Sale Basics Shorts
Essentially, a short sale is when the bank or mortgage lender agrees to sell the home for less than the amount currently owed on a mortgage to avoid having to initiate costly foreclosure proceedings. For a home to qualify, it must be worth less than the amount owed; In a typical short sale qualification, the borrower will also be asked to prove his financial hardship and his inability to pay. It’s not the only alternative to foreclosure, but it’s often one of the best in today’s housing climate.
Dirty Myths Shorts
There are a number of stigmas about short selling that are distortions or outright lies. To begin with, many people seem to think that it’s too complicated, that bankruptcy is bad, or that foreclosure is the easy way out, when nothing could be further from the truth. In fact, a foreclosure can be terribly complicated, with the legal fees and disputes involved; What’s more, if the foreclosure doesn’t give the lender the full amount of the loan, he may be entitled to the rest. This means that even after foreclosure and the loss of your home, you could be on the hook for tens of thousands of dollars on a home you no longer own!
A short sale, by its very nature, avoids this pitfall; Entering into an agreement with the lender means that you agree to forgive any discrepancies in the sales price versus the amount owed on the loan. A lender is also generally more interested in a short sale than in foreclosure proceedings; Taking a home through foreclosure costs the bank a hefty sum in legal fees, upkeep and maintenance, and time; A short sale generally saves the lender a great deal of time and money.
The further a borrower falls behind on their mortgage payments, the more difficult it is to get approved. If you’re struggling with an underwater mortgage and aren’t sure what to do, talk to a bankruptcy attorney. Attorneys are trained in the art of foreclosure defense and debt settlement. You can find solutions to your problems without filing for bankruptcy.