A short sale occurs when the lender allows a property to be sold for less than the amount owed on a mortgage and takes a loss. This usually occurs when the market drops and the property is worth less than what the current mortgage is. You can request permission to conduct a short sale from your lender at any time. You do not need to be default to receive permission however you will most likely need to meet several other criteria before you are granted permission. The obvious benefit to this is that you can get our of your current loan early if you are ok with taking a loss.
At the moment the government is not taxing any debt forgiveness by your lender during a short sale. All the more reasons to seriously consider going the short sale route.
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FORECLOSURE |
SHORT SALE |
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*can lower credit score by 200-300 points |
*credit score will be affected * may only lower score by 40-135 points |
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*foreclosure stays on credit report & public record for 7 years |
*post short sale lender may report as:
1. paid / as agreed
2. paid/ settled
3. paid/ unrated
4. paid/ less than owed
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*24-72 months before you can buy again |
*as soon as 24 months to buy again |
Foreclosure
A foreclosure normally occurs when a Homeowner fails to meet the obligations of their mortgage. This is the legal process by your lender to reclaim your property and sell it to pay off your loan. There are three phases of foreclosure: 1. Preforeclosure (Private) 2. Public Auction (Public) 3. Real Estate Owned or REO (Private).
Foreclosure begins the day that you are late with your mortgage payment and late charges begin accruing. In about 45 days the lender sends notice of default and follow with the notice of intent to foreclose. At around 150 days the auction takes place. Your redemption period is from the time the property sold at auction until the clerk files the paperwork.
If you find yourself in the position of having to decide between letting your lender foreclose on your home or attempting to sell in a short sale, call me. Short Sales have become very popular in today's market and having an experience agent by your side can make a huge difference.
Maggie Bulerin
407-760-6918
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