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What is the difference between a Short Sale and Foreclosure?

Many Americans are facing financial hardship, and finding it difficult to afford their mortgage obligations. What was once a dream come true has to often become a nightmare scenario. Two of the most common worst case outcomes from mortgage difficulty are short sales and foreclosure.

While neither option allows the homeowner to continue living in their home, there advantages to the short sale process over foreclosure. Short sales require the borrower to follow very specific, and often confusing, protocols and strict timelines set down by the mortgage companies. If you are home owner in distress and your options are short sale or foreclosure a short sale can offer some protection to your credit score.

Short Sale

In the simplest terms a short sale is where the bank agrees to let you sell the house to a new buyer for much less than your current loan, and once completed forgives your original thus loan protecting your credit score. You sell your house for much less than what you owe in your present loan. While you must move out of the house, this will allow you to save your credit history and avoid the stain of foreclosure. In this process the buyer usually does not pay the full cost of the house, but the bank agrees to accept a lower payment as the full payment

Obviously, banks have been historically reluctant to give permission for short sales as they must take a loss on their books. However, with the foreclosure crisis that has left many Americans under water financially, more banks are allowing this solution.

The outcome for a short sale has a new buyer in the house making mortgage payments, the bank takes a much smaller loss and your credit is kept from being destroyed. While you might lose your home, your no longer have an unmanageable burden looming over you and can move on.

Foreclosure

Of all possible outcomes, foreclosure is the worst one faced by distressed borrowers. After struggling to makes burdensome mortgage payments, once the lender has exerted their true legal ownership on the property the borrower faces eviction from their home. Further, the lender can can pursue judgments against you for the debts you owe plus costs for the foreclosure actions. After all that, your credit report will pis devestated and will require years to be useful again. Foreclosure is a worst case scenario and should be avoided at all costs.

If you find yourself facing foreclosure or thinking about applying for a short sale acceptance, then you need expert advice on the best path forward. There are many ways available to avoid a foreclosure.

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Bexley Homes - Bexley is a city in Franklin County, Ohio, United States. Incorporated as a village in 1908, Bexley is an old tree-lined suburb of Ohio's capital, Columbus, located on the banks of Alum Creek right next to Driving Park.
Canal Winchester Homes - Canal Winchester is a village in Fairfield and Franklin counties in the U.S. state of Ohio. The population was 4,478 at the 2000 census.
Columbus Homes - Columbus is the capital and the largest city of the U.S. state of Ohio. Located near the geographic center of the state, Columbus is the county seat of Franklin County, although parts of the city also extend into Delaware and Fairfield counties.
Delaware Homes - Delaware is a city in the U.S. state of Ohio and the county seat of Delaware County.
Dublin Homes - Dublin is a city in Franklin, Delaware, and Union counties in the U.S. state of Ohio. The population was 31,392 at the 2000 census. In 2007, the population was estimated to be 37,954, and Dublin continues to be one of the fastest-growing suburbs of Columbus.
Gahanna Homes - Gahanna is a city in Franklin County, Ohio, United States. The population was 32,636 at the 2000 census.
Grandview Heights Homes - Grandview Heights is a city in Franklin County, Ohio, United States. The population was 6,695 at the 2000 census.
Granville Homes - Granville is a village in Licking County, Ohio, United States, founded by settlers from Granville, Massachusetts, a town of which it now has three times the population.
Grove City Homes - Grove City, founded in 1852, is a city in Franklin County, Ohio, United States. The population was 27,075 at the 2000 census. It is a suburb of Columbus.
Groveport Homes - Groveport is a village in Franklin County, Ohio, United States. The population was 3,865 at the 2000 census, and estimated to be 4,926 as of July 2006.
Hilliard Homes - Hilliard is a city in Franklin County, Ohio, United States. The population was 24,230 at the 2000 census. Hilliard's population was estimated to be 26,656 in 2005, and the city continues to grow.
Lewis Center Homes - Lewis Center is an unincorporated community in northwestern Orange Township, Delaware County, Ohio, United States, located between Columbus and Delaware.
New Albany Homes - New Albany is a village in Franklin and Licking Counties in the U.S. state of Ohio, just northeast of the state capital of Columbus.
Pataskala Homes - Pataskala is a city in Licking County, Ohio, United States. The population was 10,249 at the 2000 census; a 2006 estimate reported a population of 12,643.
Pickerington Homes - Pickerington is a city situated in Fairfield and Franklin counties in the central region of the U.S. state of Ohio.
Powell Homes - Powell is a city in Delaware County, Ohio, United States. The population was 6,247 at the 2000 census.
Reynoldsburg Homes - Reynoldsburg is a city in Fairfield, Franklin, and Licking counties in the U.S. state of Ohio.
Sunbury Homes - Sunbury is a village in Delaware County, Ohio, United States. The population was 2,630 at the 2000 census, and estimated to be 3,252 as of July 1, 2006.
Upper Arlington Homes - Upper Arlington is a suburban city in Franklin County, Ohio, United States, on the northwest side of the Columbus metropolitan area.
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Looking for Foreclosures, Short Sales or HUD Homes for Sale in Columbus or Central Ohio?
Foreclosure Buyer's Guide for Columbus Ohio Homes for Sale!
What is Foreclosure?
What is Foreclosure VS Short Sale?

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