There are many factors in real estate that can lead to a foreclosure. Maybe the market crashed, meaning your home is now worth far less than you paid for it. Perhaps you lost your job and income, so you can no longer afford your mortgage payments.
Regardless of the reason, a foreclosure can have long-lasting effects on your credit score and your ability to buy a new home.
The Consequences of a Foreclosure
It also means that you can’t purchase a new home for anywhere from 5 to 7 years.
To save money, and protect their credit scores, homeowners have a number of options to prevent a foreclosure.
Alternative Options to Foreclosing
This option usually results in nothing for the homeowner, so it isn’t ideal unless the lender offer something in return.
A loan modification is available for homeowners with very good credit scores. The lender will reduce the interest rate or extend the return of the loan.
It requires the homeowner to supply the lender with all of their financial information, including pay stubs and tax information.
Bankruptcy may seem like an appealing option because, in the past, it wiped your credit score clean. However, new laws have made it so that bankruptcy can result in increased fees, a court-monitored repayment plan, and the same amount of debt.
If you’re in danger of foreclosing, there is another option that will preserve your credit score and result in less money owed.
The Benefits of the Short Sale
A short sale is when the homeowner sells their home to the lender for less money than they owe. To perform a short sale, the homeowner must negotiate with the lender and the lender must accept.
Often, lenders receive more money from a short sale than a foreclosure, meaning they’re more likely to pay for associated fees.
A Short Sale Give you More in the Long Run
If you choose to short sell, you’ll be eligible to buy another home in just 2 to 3 years. A short sale will affect your credit score, but not nearly as much as a foreclosure.
In my opinion, a short sale is a smart financial decision for when you can no longer afford your mortgage.
Looking to Short Sell Your Home? We Can Help.
If you need assistance in short-selling your Dallas area home, purchasing a short sale home, or navigating your mortgage; please contact us at (214)-680-4550.
Glazers Realty has over 10 years of professional experience in real estate. We want to make sure you have everything you need to achieve your real estate goals, so that your home sells without a hitch!