Short Sale vs Foreclosure – What’s the Difference in San Antonio?

Whether you are a buyer or a borrower/seller, a short sale vs foreclosure presents distinct advantages and difficulties.

What Is A Foreclosure In San Antonio, Texas?

Basically…”A foreclosed home is one in which the owner is unable to make his mortgage loan payments and the bank repossessed the home” (source). If you stop making your loan payments… your creditor has the right to foreclose on your house so that they can try to recoup their money that was lent to you.

A house is usually foreclosed on when a borrower fails to make mortgage payments. The lending institution assumes possession and ownership of their home, evicting the borrower. These properties are then sold at auction or even more conventional means utilizing the service of real estate agents. A foreclosure can harm the credit rating of a debtor, and make it quite hard to obtain a mortgage for several years.

Depending upon the state that you reside in… a foreclosure may work in various ways. Check out the foreclosure process information on the HUD Government website.

What Is A Short Sale?

In a short sale, the borrower still owns the home.

A short sale is defined as “…a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt” (source: Wikipedia)

In some cases, a short sale is an option agreed upon by lenders and borrowers. In a short sale, the house is sold for less than the outstanding balance of the mortgage. The unpaid balance (known as the deficiency) may or may not still be owed by the borrower.

This option usually takes some time, since a few different lending institutions may own the mortgage. All parties that have a stake in the property must agree to the terms of the sale, and a possible deal could fall through if even one lender does not agree.

Short Sale vs Foreclosure – Your Options

While these two options can have ramifications, a short sale frequently has less of an effect on the borrower’s creditworthiness. A foreclosure may impact a borrower’s credit score by 300 or more points, while a short sale might only dent the credit score by 100 points.

Borrowers that are foreclosed on often are ineligible to purchase another house for 5-7 years using a conventional mortgage, where under certain circumstances, a short sale borrower can buy instantly.

As many Americans continue to struggle with the current economy, people are having a hard time making monthly mortgage obligations. Selecting between initiating a short sale vs foreclosure (or a 3rd option… selling your San Antonio house fast) is an easy choice for a debtor having problems paying their mortgage on time.

Sometimes, lenders are willing to work with borrowers to complete a short sale, to prevent the fees and time-consuming procedure of conducting a foreclosure.

Our suggestion is always like this…

  1. Speak with your lender and discuss ways that they can work together with you in your loan. We provide this service where we can help guide you in the right direction if you encounter problems with your lender… just reach out to us on our Contact page and we’ll discuss your situation.
  2. Attempt a short sale or other programs your lender might have that forgives part of your loan, generates a new / more affordable monthly payment so that you can get back on your feet, etc.
  3. If the bank isn’t willing to work together with you very much… your very best option may be to sell your house. Work with a local real estate property buyer service such as Lone Star Real Estate Solutions LLC in order to sell your house fast for an all-cash offer. If you’re interested we’d be happy to look at your situation and make you a fair offer on your home usually within 24 hours. Just complete the form on our website over here >>
  4. Foreclosure. Your last resort is to allow the house to fall into foreclosure. This is actually the worst possible scenario. It will hurt your credit and you could still be left owing money to the bank even after the foreclosure is finished.

By understanding your options, you may have the ability to dodge a substantial impact on your credit rating, allowing you to buy a new house when your situation improves. A foreclosure on your credit report makes that possibility extremely hard for 5-7 years, so if you’ve got the opportunity, a short sale could be the better option.

Do you have a pending foreclosure? We’d love to make you a fair all-cash offer on your home.

Just give us a call anytime at 210-807-6567 or
fill out this form on our website today! >>

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