Which Is Better? A Foreclosure or Short Sale of Your Raleigh House?

If you are facing financial difficulties and need to sell your house, you may be considering a foreclosure or a short sale. Both options have their advantages and disadvantages, so it is important to understand the differences between them before making a decision.

As a property owner, having a rough time may mean losing the biggest investment of your life: your Raleigh house. If you are unable to make your mortgage payments, you may find yourself facing foreclosure with your lender if you miss a certain amount of payments; this all depends on your mortgage document.

Facing foreclosure can be a frightening experience as it is a serious situation to be in, and it can have long-term consequences. It’s important to understand the differences between these two options in order to make an informed decision. A foreclosure is when the lender takes ownership of the property if you are unable to pay your mortgage, while a short sale is when you sell the property for less than what you owe on it. Both options have their advantages and disadvantages, so it’s important to weigh them carefully before making a final decision.

Foreclosures Happen To The Best Of Us

In most cases, the foreclosure process will not begin until you have missed between 3-6 payments. It is important to understand what foreclosure entails, from pre-foreclosure to post-foreclosure, in order to ensure that everyone involved understands their rights and obligations.

Pre-foreclosure is the first step in the foreclosure process. This means that the property is in default and the bank may or may not foreclose on the property. It also involves several steps that must be taken before a lender can take possession of a property.

The second step in the foreclosure process is a short sale, which is when the owner of the property attempts to sell it before the bank forecloses. This can be a difficult process for many homeowners as they may not have enough time or resources to find a buyer and negotiate a deal. However, with proper planning and assistance from experienced real estate professionals, it can be done successfully. A short sale can help homeowners avoid foreclosure and keep their credit score intact. It also allows them to minimize losses on their investment while still getting some money out of it.

The foreclosure auction is the third step in the foreclosure process, and it’s when banks are trying to maximize their return on the property in a short amount of time. During this stage, potential buyers can bid on the property, and if no one bids higher than the bank’s reserve price, then the bank will take ownership of it. This process is often seen as a last resort for lenders to recoup some of their losses from defaulted mortgages. It can also be an opportunity for investors or homebuyers to purchase properties at discounted prices.

The fourth step in the foreclosure process is an REO, which stands for “Real Estate Owned”. This occurs when a property does not sell at auction and the bank repossesses it. After repossession, the bank will manage and maintain the property until they can find a buyer. This process is often lengthy, as it may take months or even years to find a suitable buyer. The bank must also take into account any repairs that may be needed to make the property marketable. In some cases, the bank may even choose to rent out the property until they can find a suitable buyer.

Based on the process outlined above, “foreclosure” is the bank taking title or “possession” of your Raleigh house. This would have a long-lasting impact on your credit score. Not only will it show up in reports that future landlords or lenders run, but it will also stay on your credit report for up to seven years, and sometimes 10 years. This can make it difficult to obtain new lines of credit and even rent an apartment or house. It is important to understand the consequences of foreclosure and how you can work to improve your credit score after the foreclosure has taken place. Depending on your situation, you may have more time to live in your home if you let it go to foreclosure because of the statutory redemption period. This time frame depends on whether you took title via mortgage or deed of trust. If you have a mortgage, then the process may take as quick as 30 days, or as long as 2 years. At the end of the redemption period, if you have not reinstated your loan and are still not able to make your payments, then you really have to move out. If you took title through a deed of trust, there is typically no statutory redemption period, and you have to move out immediately.

Is A Short Sale Really The Answer?

During the foreclosure process as described above, you have the opportunity to list your Raleigh house as a short sale. The best time for a short sale is the time period when you realize you are unable to make your payments as outlined in your loan agreement, and before the lender files legal action against you and officially owns your house. You will be able to list your house on the market and try to get an offer that will satisfy the balance of your loan or get really close to it. This might be a difficult process because you will have to be in constant communication with the lender about the offers you receive and will have to wait for them to approve or counter offer the offers you receive. If you do have an offer that the bank is willing to accept, selling your Raleigh house to that buyer would relieve you of some of the credit damage of having a foreclosure, although it would still negatively affect your credit. 

The best option would be to avoid the foreclosure process altogether and negotiate a sale of your property before you get to the point of missing payments on your loan.

Contact Present Day Properties today at 984-689-9785 to see what options we could offer you so you wouldn’t have to decide which would be better, a foreclosure or short sale of your Raleigh house.

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