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

Foreclosure or Short Sale

We all have rough times now and again. As a property owner, having a rough time may mean losing the most significant investment of your life: your Philadelphia house. If you cannot make your mortgage and insurance payments, you will face foreclosure with your lender if you miss a certain amount of fees; this depends on your mortgage document. It’s important to review your options before it becomes too late and the effects of foreclosure are imposed. If you’re a homeowner with a prior foreclosing on your record, it directly affects your credit score and may prevent any other loans on the property or even a vehicle. Our company recommends selling a house as is in PA before pre-foreclosure to avoid any other serious issues. This blog post compares and contrasts the similarities between a foreclosure sale to a short sale.

Foreclosures Happen to The Best of Us

In most cases, the foreclosure process will not begin until you have missed between 3-6 payments (typically three to six months.) First, it is essential to understand that foreclosure is a process; it’s not conducted overnight. The first step is called pre-foreclosure. This means that the property is in default, and the bank may or may not foreclose on the property, depending on how the process is approached and handled. The second step is a short sale. A short sale in real estate is where the owner tries to sell the property before the bank forecloses, but the market value is a little short of the balance due on loan. Depending on the bank, they may or may not accept offers more minor than the balance due at this point. If the owner can get the bank to short sell, it is much better for their credit because the responsibilities are relieved from the homeowner. The third step is the foreclosure auction. This is when the bank is trying to get the most money for the property in a short time, which can equal success but can be risky and stressful. The fourth step is an REO, “Real Estate Owned.” If the property does not sell at auction, the bank then repossesses the property and places it on the market for sale. Once the bank acquires the property, the prior homeowner will take a significant credit hit and reflect it on their credit report. If you decide to be proactive, the best way to avoid foreclosure or a short sale will be to sell your house directly to a local real estate investor. Most investors can close on the property quickly, typically within twenty-one days. Cash home buyers fund their deals, so there’s no need for inspections or financial contingencies; once the title search comes back clear, the process is completed. Buying Property 215 purchases property in any condition, so it’s not necessary to make any house repairs along with a quick house sale!

Based on the process outlined above, “foreclosure” is the bank taking your Philadelphia house’s title or “possession.” This would impact your credit score and show up in any reports that future landlords would run. The foreclosure stays on your credit for at least seven years before falling off, sometimes ten years. 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. The process may take as quick as 30 days or as long as two years if you have a mortgage. At the end of the redemption period, if you have not reinstated your loan and are still unable to make your payments, you have to move out. If you took title through a deed of trust, there is typically no statutory redemption period, and you must move out immediately.

Is A Short Sale The Answer?

During the foreclosure process, as described above, you have the opportunity to list your Philadelphia house as a short sale. The best time for a quick sale is when you realize you cannot 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 home on the market and try to get an offer that will satisfy your loan balance or get close to it. This might be a complicated process because you will have to constantly communicate with the lender about your offers and wait for them to approve or counter the bids you receive. If you do have a suggestion that the bank is willing to accept, selling your Philadelphia house to that buyer would relieve you of some of the credit damage of having a foreclosure. However, it would still negatively affect your credit. Feel free to contact us to see how we can assist you; Buying Property 215 has over five years of experience helping homeowners solve real estate issues. The Better Business Bureau accredits our family-owned company with an A+ rating and 5-star google reviews! 

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

Contact [Buying Property 215] today at [215-359-6090] 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 Philadelphia house.

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