Short sale and foreclosure—these are two terms homeowners often hear when they’re financially distressed and are struggling to continue staying on their current property. Whether you’re one of these homeowners facing financial difficulties or you’re simply preparing for the future, it’s important to understand what the terms “short sale” and “foreclosure” really mean. Today, we’ll bring to light the differences between short sale vs foreclosure and what they mean for homeowners in Little Rock, Arkansas.
Short Sale vs Foreclosure in Little Rock, Arkansas
Although short sales and foreclosures have similarities, as they are both common options for homeowners who fall behind on mortgage payments, the two processes also have some major differences. While a foreclosure is conducted by the bank to repossess the property (often against the homeowner’s will), a short sale is a process that occurs when the homeowner still owns the property. In many cases, homeowners choose to have a short sale rather than having their property foreclosed.
There are a number of other differences between these two processes. Below, we’ll discuss in further detail the differences between a short sale vs foreclosure in Little Rock, Arkansas.
What is a Foreclosure in Little Rock?
Simply put, foreclosure is a situation in which a lender takes ownership of and sells a mortgaged property in order to recover the amount owed on a defaulted loan. This situation typically occurs when the borrower misses several monthly payments, although foreclosure may also occur if the borrower fails to meet certain terms in the mortgage document.
Once the lender repossesses the home in Little Rock, the property is sold either at auction or through the service of real estate agents. As for the borrower, a foreclosure can damage their credit rating, as well as make it difficult for a mortgage to be obtained in the future.
What is a Short Sale in Little Rock?
Unlike a foreclosure, a short sale in Little Rock is when a property is sold for less than the amount due on the mortgage. The buyer of the property is considered a third party in the sale, and all the proceeds in the sale will go to the lender of the property.
A short sale normally takes place when a financially distressed homeowner must sell their property in order to avoid foreclosure. A major difference between a short sale vs a foreclosure is that a short sale does not affect a homeowner’s credit rating as much as a foreclosure does. Despite the name, however, a short sale is not always quick and can take several months to fully process. Because a short sale is a lengthy process that includes paperwork-intensive transactions for all parties, it is not always the fastest solution for selling a house to prevent foreclosure.
Short Sale vs Foreclosure—Options To Consider in Little Rock
While both a short sale and foreclosure can have a negative impact on a borrower’s credit, a short sale has less of an effect on a borrower’s credit score. Because foreclosure can impact a borrower’s credit score by 300 points while a short sale affects it by only 100 points, a short sale is considered a far better option than foreclosure for financially distressed homeowners.
Whether you’re dealing with a short sale or foreclosure in Little Rock, there are several options for homeowners to consider. In many cases, the lenders are willing to work with the borrowers to complete a short sale, as lenders want to avoid the time and expenses of conducting a foreclosure. Before you start planning a short sale on your property, consider your options listed below:
- Discuss Your Options with Your Lender. Before you make any drastic decisions, discuss the situation with your lender and explore possible options. Perhaps your lender will be willing to work with you on your loan, or they may help complete the short sale. In addition to discussing the situation with your lender, consult an expert for advice on the matter to avoid running into issues with your lender.
- Attempt a Short Sale or Discuss Other Programs with Your Lender. As you discuss the situation with your lender, you may learn about other programs that forgive part of your loan and create affordable monthly payments until you can get back on your feet again. If these options aren’t available, then it may be time to consider attempting a short sale.
- Sell Your Property In Little Rock. As an alternative to a short sale, you may consider selling your property in Little Rock, Arkansas. Because traditional real estate sales can also be a lengthy process, you may consider selling to a direct buyer, such as Little Rock Property Buyers. By selling to our company, you can sell your house fast for cash in as little as seven days, or on your schedule.
- As a Last Resort, Allow Your Property to Foreclose. While this can be devastating for you both financially and emotionally, you may find that a short sale is too lengthy and difficult of a process for avoiding foreclosure. Keep in mind, however, that a foreclosure can harm your credit by hundreds of points and prevent you from purchasing another home with a traditional mortgage for up to seven years. In some cases, homeowners may still owe money to the bank even after the foreclosure process is completed.
Sell to Little Rock Property Buyers to Avoid Foreclosure and Short Sale
Want to avoid both a short sale and a foreclosure? Consider selling to Little Rock Property Buyers, a home buying company in the Little Rock area. At Little Rock Property Buyers, our process is quick and easy. Simply send us your property’s information, and we will provide you with a fair, all-cash offer within 24 hours. Once we give you the no-obligation cash offer, you can be assured your property will close in as little as seven days or on your schedule. Because we buy Little Rock homes as-is, you won’t have to worry about clean-up or repairs before selling to us.
Ready to sell your property to Little Rock Property Buyers? Message us online or call us at 501-580-3035 to set up an appointment with us. We look forward to hearing from you!