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In most cases it is preferable to foreclosure.

I disagree. A short Sale has less impact on your credit score than a foreclosure.

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โˆ™ 2010-12-08 07:23:18
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Q: Is a short sale better than foreclosure?
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What is better a short sale or a foreclosure?

A short sale is always better. I will tell you why very definitively. When you purchase a home on a short sale you are helping a homeowner salvage their credit and dignity and helping them out of a bad situation. You are also preventing a large loss for the bank and getting a great deal for yourself. Everyone wins if it is done correctly. A foreclosure will have a very bad effect on a homeowner's credit and the bank will in most cases take a bigger loss than they would in a short sale. A sellers credit in a short sale will be damaged to a lesser extent than a foreclosure. In most circumstances if you have done a short sale you will not be able to get another loan for two to three years. In a foreclosure it is usually around five years before you can purchase another home.

Is a short sale better for your credit than a voluntary foreclosure?

I spoke with a lawyer...Voluntary foreclosure could be better because it would only be 1 hit on your credit instead of having to go 180 days past due. You can offer the deed to your house if the bank will take it to prevent the bank from placing a judgment for any amount uncollected at the sale.

How does short sell affect credit?

It all depends on how late or how many payments you were late when you start the short sale. In most cases if you get a successful short and your home gets sold it is a lot better than having a foreclosure on your credit report.

Can you get a short sale all the time?

A short sale is most often using when a homeowner is facing foreclosure. If the amount offered by a potential buyer of your house is less than the amount you owe your lender, you can ask the lender to accept the offered amount as payment in full. The lender does not have to agree to accept a short sale. They may elect to go ahead with a foreclosure because of other liens on the property (such as 2nd mortgages.) You can request a short sale by submitting a short sale hardship letter to your lender.

What is a short sale?

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers.

How long does a short sale affect your credit?

Iam bout to lose my house soon, getting divorce!. is it recommended to do a short sale? I am concerned about 1099-C taxes I have to pay to IRS and how bad my credit will be if I want to get a cheaper property later on. does enybody know how much afeccts short sales, is it better than a foreclosure! Thanks

What is difference between foreclosure and short closure of contract?

A short closure of contract is typically called a short sale. In a short sale, the owner works with the bank to sell the property at a price less than the market value. The goal is to get as much of the loan paid as possible. The owners owe the bank the difference between the sale price and the loan amount whereas in a foreclosure the buyer just walks away and owes much more.

Is a short sale a better option than a deed in lieu of foreclosure?

You can only use a short sale if you have a potential buyer for your house. If the buyer's offer is less than you owe the lender then it "comes up short." You send the lender a request for a short sale letter asking it to accept the buyers offer as payment in full. A "deed in lieu" is used when you don't have a buyer and you want the lender to accept the deed to the house instead (in lieu) of foreclosing. Generally, you can't use a deed in lieu if you have a 2nd mortgage or substantial liens on the property.

What is the difference between a short sale and a foreclosure in real estate matters?

When the owner of a home can no longer afford to make payments on their home mortgage, the home may be sold in a short sale before it enters into foreclosure. A short sale is one of a homeowner's last resorts. It occurs when a home is sold for less than the balance remaining on the mortgage. Typically the homeowner and lender strike a deal in which the homeowner agrees to accept less than the amount they owe on their home (making no profit) in exchange for the lender forgiving the remaining amount on the loan. This process may still damage the homeowner's credit, but they will avoid foreclosure. If a homeowner can't make payments on their mortgage and the home does not sell through a short sale, the lender can take possession of and sell the property by a foreclosure proceeding. To find out more read the full article on

What is a short sale for real state?

Any sale of real estate that generates proceeds that are less than the amount owed on the property. A real estate short sale occurs when the lender and borrower decide that selling the property and absorbing a moderate loss is preferable to having the borrower default on the loan. It is therefore an alternative to foreclosure. It is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower.

Is a foreclosure a valid reason for a short sale?

A short sale is a sale where the buyer's offer comes up "short." If you're selling your home and you receive an offer that is less than you owe on your house, you've sold it short. It can appyl to a homeowner you wants to get rid of their house, even at a loss. More typically, it used when a homeowner is facing foreclosure. A homeowner with a buyer who offers less than the amount owed on their house can approach the lender requesting they accept the short sale rather than foreclose. The lender is under no obligation to accept a short sale. If you don't have a buyer, you should ask your lender to consider a "deed in lieu." With this option, you're asking the lender to accept the deed to your house instead of (in lieu) of foreclosing. A REALTOR can help you with a short sale. Because there is often little or no commission involved with a deed in lieu, you should speak with an attorney. You can find one through a local bar association lawyer referral service. Usually, they offer a discounted initial consultation.

Is there any money to be made for the seller in a short sale?

No. A short sale is a sale that doesn't bring in enough money to pay the amount owed on the note. (It is sometimes loosely used to describe a sale that brings in less than price asked for a house.) A short sale most often occurs when a homeowner is confronted with foreclosure. The homeowner asks the lender to accept a buyer's offer for their house that is less than the amount owed on mortgage loan. Because the bank is taking a loss, there is no way that a seller is going to make any money on the deal.

What are the Benefits of real estate short sale?

Short sales offer a number of benefits to buyers. Because, during a short sale, homeowners agree to sell a house for less than the amount owed on the mortgage loan. This type of sale requires the lender to approve of the deal, while short sales sometimes leave sellers owing money to the lender, they also provide an alternative to foreclosure. In addition to helping the seller protect their credit.

Will foreclosure keep you from buying a house in the future?

It's better to sign the house back to the financer to save them the trouble of going through foreclosure, just for their convenience. If you keep your credit clean for a few (3 or more) years, you should be able to purchase a house, but be prepared to come up with a 20% down-payment and pay higher interest than others. Generally speaking a foreclosure will effect your ability to buy another home for around five years. If you are able to do it a short sale would be a better route than being foreclosed on. You can also consult with an experienced bankruptcy attorney if you have questions.

Does a short sale affect credit score?

A short sale takes place when a lender accepts less than they are owned on a loan secured by a property in the US. In most cases the borrower was already in default on the loan prior to the agreed short sale. The lender will have already reported the late payments or default and there likely was credit damage. The short sale can be recorded as paid as agreed or various other language. A short sale might show as a negative. Or it will show as the loan being paid off after a number of late payments so the credit file shows an account going bad and then no further activity on that account. A short sale is much better than a foreclosure or bankruptcy filing on one's credit report. Late payments are normally the only real sign of a short sale and late payments have an impact for approximately 12 months before a credit score starts to improve. When dealing with your credit report check it yearly and challenge all items that are not accurate.

Short Selling a House Leads People Away From Foreclosure?

Before a house goes into foreclosure, homeowners have the option of agreeing to a short sale. This generally happens when a house is in the pre-foreclosure stage. At this stage, the lender has not taken the final steps to begin foreclosing on the property. The homeowner may wish to avoid foreclosure proceedings, because the foreclosure will damage their credit for a long time. They can avoid a foreclosure by short selling. A short sale is when homeowners sell a house for less than the mortgage is worth. For example, the mortgage is may be $150,000. The homeowners are currently having difficulties selling the house because housing prices have dropped so much recently that they can't sell the house to cover what is owed on the loan. The homeowners may only manage to sell the house for $130,000. If the lender agrees to take the $20,000 loss, the homeowners can proceed with the short sale. In order to qualify for a short sale, four requirements must be present. If the house is located in an area where housing prices have dropped significantly and the value is less than the current mortgage, the first qualification has been met. If the homeowners are very close to defaulting on the loan and are currently experiencing financial difficulties that will make it impossible for them to pay their monthly mortgages, they have met the second and third qualifications. The last prerequisite is that the homeowners have no assets with which to pay the difference between what the house will sell for and the amount of the mortgage. These homeowners must be able to prove that they are in no position to pay the remaining amount or else the lender may not allow the short sale. After the lender has agreed to take less than is owed, the homeowner can list the house for sale as a short sale with a real estate agent. A potential buyer will make an offer that will be lower than the amount owed on the mortgage. Both the homeowner and the lender will have to agree before the offer can be accepted. If the offer is agreed to by both parties, the sale goes through and the homeowner avoids foreclosure. Short selling a house can keep people from having to declare bankruptcy and have foreclosure proceedings started against them. They relieve themselves of monthly payments they can no longer afford and they can begin to start their lives anew.

What is the difference between deed in lieu and a short sale?

As a distressed property owner, you may hear about many alternatives to help homeowners avoid foreclosure. A deed-in-lieu of foreclosure and a short sale are alternatives for homeowners to avoid foreclosure. They both, however, are slightly different and come with specific risks and benefits. Read on below to see a comparison of both of these alternatives to avoid foreclosure.Deed-In-Lieu of ForeclosureWhat it is: A deed-in-lieu of foreclosure is where a Knoxville homeowner deed their home back to the lender, who will in return release the homeowner from their mortgage.Benefits: The lender promises to cancel any foreclosure proceedings. The homeowner avoids foreclosure and does less damage to their credit.Risks: The lender could still pursue the homeowner for a deficiency judgement.Why it could be the right choice: The homeowner will want to read the contract carefully to make sure the lender will not hold them liable for a deficiency judgement. While consulting with an attorney can be costly, having an attorney look over the contract is significantly less expensive than having a lender pursue you for a deficiency judgement.Short SaleWhat it is: A homeowner owe more on their home than it is worth. The seller negotiates with their mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.Benefits: The homeowner avoids foreclosure and does less damage to their credit.Risks: Negotiating short sales can take a long time. Distressed homeowners will want to make sure they select an agent that has experience with the process and is able to do them successfully. Otherwise, while the short sale is being negotiated, the homeowner may end up in foreclosure anyhow. Also, the distressed homeowner will want to make sure they know the terms of their short sale and that the lender agrees not to pursue them for a deficiency judgement.It can be difficult to determine whether a short sale or deed-in-lieu of foreclosure is the best option for you. While an experienced short sale agent will be able to provide you with information about your options, you should always be sure to seek legal counsel if necessary.

How can one apply for pre foreclosure?

First you have to qualify for a short sale (meaning ubouve all else - you cannot have assets like a second property) than speak to a bank manager and a real estate broker.

Can there be a deficiency judgment on a mortgage foreclosure in West Virginia?

No, adeficiency judgment may not be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures.

Can expenses preparing a house for sale be deducted if foreclosure occurs?

Deducted from what? If a house is sold at foreclosure, expenses related to preparing the house for a normal sale are not relevant. Generally, expenses to prepare a house for a voluntary sale are not recovered in the sale, except for a few markets where demand for houses exceeds the supply, and even then the seller is better off just cleaning up cluttered rooms and making coffee or baking something chocolate while showing the house. If, by some chance, your house sells at auction for more than you owe and the fees for the foreclosure, it is unlikely any of the expenses would qualify as increasing the basis (how much you paid for the house), thus lowering your taxable gain.

What is the meaning of cash for keys in a foreclosure?

Foreclosures are costly and time consuming for banks. A cash for keys deal occurs when a bank allows someone to sell their home for less than its value (short sale) and gives them a predetermined amount of cash to help them move.

What are the steps to stop foreclosure after the process has started?

I would call your mortgage lender and see what type of options they have available. Although the data on restructuring mortgages has not been very successful. One option that may work for you would be a short sale. That's where the bank takes less for the house than you have on your loan. It still goes on your credit, but it's not as a bad as a foreclosure and they don't go after you for the difference.

What are the deficiency judgment laws in Minnesota?

Minnesota is both a judicial and non judicial foreclosure state . Foreclosure by action is a judicial foreclosure and foreclosure by advertisement is a non judicial foreclosure . The vast majority of foreclosure than happen in MN are by advertisement. Under foreclosure by advertisement the rule is that however takes the loan to sheriff sale relinquishes their right to a deficiency judgement. As most foreclosures are initiated by a first position mortgage there is still a potential deficiency that could arise from a second position mortgage.

What is the house foreclosure process?

Foreclosure is governed by state law, different states can observe different foreclosure procedures. In foreclosure, the lender, mortgagee, automatically becomes full owner of the property when a borrower, mortgagor, defaults. The borrower can still pay the full amount and get the house back during the redemption period. If the money is not paid back, you will lose the ownership of the house. Then the house will be sold at a public sale or auction to pay for the full loan amount, if the sale is less than the amount owed, you will owe the difference.

What is a short fall sale?

A "short sale" refers to a home that is being sold for less than the balance owed to the mortgage company. For example, a home is listed for 450,000, but the owner owes 600,000 on the home. This would be a short sale.