Real estate jargon can be a struggle for any first-time buyer or someone trying to get into real estate. In fact, understanding the ins and outs of real estate can be extremely overwhelming. As a result, here is a breakdown of the variations between foreclosures and short sales.
Let’s start by defining our terms before we dive into the nitty-gritty:
Foreclosure is the legal process where mortgaged homes are sold off by the bank due to a loan that is in default. In simplest terms, if you don’t pay your mortgage you are running the risk of your home being seized and then sold because you couldn’t pay your bills.
A short sale is when you sell your home for less than the balance on your mortgage. This obviously lessens the value of your home but if your lender agrees to the short sale, you would then use the money from the sale to pay a portion of your mortgage back, thereby bypassing foreclosure.
Your Credit Score
An individual’s credit score is incredibly important when it comes to real estate investment, credit cards or other loans. Both foreclosure and short sales have strong negative impacts on your credit potentially even dropping it up to two hundred points. Even with the housing market on decline, either occurrence can damage your credit significantly.
Lesser Of Two Evils
If you are unlucky and are becoming behind on your mortgage payments you may be wondering which is the “better” option for you. It really comes down to where you want to move next if you are looking to downsize to an apartment either option the consequences are more or less equal. In the case of wanting to move into another home, the waiting period is what you want to pay attention to. In the event of a short sale, you potentially can get a new home in two years or potentially less. In the event of foreclosure, you may be waiting up to eight years. Consult a real estate attorney for advice and current guidelines for some wisdom.
Colony Title: A Title Company You Can Trust
At Colony Title we will help you through the process of getting you property’s title and help you avoid the hidden costs and pitfalls while you buy your home. We are well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington D.C. and we will provide a number of services including performing a title search, check through past documentation and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at 410-884-1160. To get more updates on the housing market and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.