Thursday, December 16, 2010

Short Sale Versus Foreclosure

Short Sale Versus Foreclosure. No doubt by now you have heard the term "Short Sale” and you have probably heard it in the same breadth as that of “Foreclosure.” The subject of both, have been bantered about the news of late, as a result of the number of mortgage loans that have defaulted and will default through the end of the year.
Starting around the year 2000, the value of real estate began to escalate, along with the availability of easy money and adjustable rate mortgages. Many buyers were able to qualify for mortgage loans and purchase property.

A poorly performing economy has resulted in a number of companies either closing their doors or being acquired. This in turn along with family illness, divorce and death has placed many people in a position where they cannot meet their obligation to pay their mortgage.

The mortgage is a promissory note to repay the money borrowed to purchase the property, with the property being used as collateral. The collateral is secured by the lender with a lien against the property.

Typically when a borrower has missed at least two payments, the lender begins the foreclosure process. Basically, the foreclosure process is a legal proceeding that allows the lender to claim the collateral as a result of the borrower defaulting on the mortgage loan.

If the borrower lacks the means to become current with the mortgage payments, they can seek to conduct a short sale. It has been stated that a short sale will reduce your credit score by 80 – 100 points on average. However, if the borrower allows the property to go into foreclosure, they run the risk of having their credit scores reduced by 200 – 300 points on average. Hence it is in the best interest of the borrower to seek the short sale approval.

It is important to remember that life goes on after the loss of a property. However, the things you need in many instances will require a review of your credit, for example: an apartment, service from utility companies, car insurance and in some cases employment. You can begin to see how minimizing the impact on your credit is in your best interest.

I have built a very successful real estate business over the past twenty-five years and along the way, I have met some very successful short sale attorneys. Together as your team of short sale specialists, we can help you to sell your property and safeguard your credit

Cal1 today to discuss your options and preserve your credit in the process, I can be reached at 908-490-2038 and remember in a short sales versus foreclosure scenario, you want to be on the side of the short sale.

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