If you’re having trouble paying your mortgage each month, you may be faced with making a decision between a foreclosure and a short sale. Understanding the differences as well as the pros and cons of each is important in choosing the right path for your particular situation.
LET’S START WITH DEFINITIONS
A foreclosure occurs when multiple missed mortgage payments result in the lender taking back a property and evicting the resident. In Las Vegas, foreclosures are final. The bank holds the deed to the property and can immediately turn around and sell it after the owner has moved out.
A short sale occurs when the value of a home is less than what is currently owed on the mortgage. This can happen through a combination of factors including a drop in the local housing market or a personal financial crisis. In some cases, lenders will allow you to sell your home and forgive the remainder of the debt to avoid foreclosure.
You can talk with a bankruptcy lawyer Las Vegas NV in more detail to determine which option is the best for your situation.
CONSIDER THE DIFFERENCES
If you are beginning to miss mortgage payments and find yourself in a worsening financial situation, it’s better to move quickly. Applying for a short sale with your lender takes time, and the foreclosure process can occur during the same period.
In a short sale, you remain the owner of the home and retain control of the house. You can sell your home and work with a realtor of your choice. Although you will take a hit on your credit report, it will not reduce your score by as many points as a foreclosure would. In addition, the short sale may not be reported on future mortgage transactions, and in some cases, you can purchase another home immediately.
By the time a foreclosure occurs, you have lost your home. In Las Vegas, foreclosures are final. After you move out of the home, the lender is allowed to sell the home, usually through an auction, as quickly as possible. Foreclosures lead to hundreds of lost points on your credit report and stay on your record for seven years. You cannot buy another home for at least five years, and then you will have restrictions until seven years have passed.
Regardless of the direction you choose to take, it’s important to consult with a professional bankruptcy attorney Las Vegas. These professionals have experience in handling a short sale, foreclosure and bankruptcy cases and can provide valuable advice on which route to pursue and why. In addition, attorneys can help navigate the paperwork and steps to help you move through the process as quickly and painlessly as possible.