Here’s what you need to know about foreclosures and short sales.
What’s the difference between a foreclosure and a short sale? These two processes can seem similar on the surface, but there are big differences between them. That’s why today we’ll go over each item and discuss how homeowners can handle each situation.
First, foreclosures happen when homeowners stop making payments on their mortgages. If you stop making payments long enough, the bank will take possession of your home, and you’ll no longer have any stake in its equity.
“You need to ask the bank permission to do a short sale.”
A short sale is a little different. If you can no longer afford your monthly mortgage payment, you can sell your home. However, if the house cannot sell for the amount left on your mortgage, you need to ask the bank for permission to do a short sale. As an easy example, let’s say someone owes $100,000, but they can only sell their home for $80,000. They would need to ask the bank for permission to do a short sale so they can be relieved of their mortgage payment.
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