When you own a home and face a difficult situation, you may be faced with a short sale or foreclosure. Let’s talk about the differences and your options when facing you may need to sell your house around Savannah in order to stop foreclosure.
What Does A Foreclosure In Savannah, Georgia Mean?
Before you can take steps to avoid foreclosure, you need to know what a foreclosure on your house means. A house in foreclosure “is one in which the owner is unable to make his mortgage loan payments and the bank repossessed the home” (source). Quite simply, if you stop making your house payments, you then have defaulted on your agreement, and your mortgage lender has the right to foreclose on your property so they can attempt to recoup the money that is owed to them.
The most common time a house is foreclosed is due to a homeowner failing to make their mortgage payments. The lending institution assumes ownership and possession of the property, evicting the borrower. The foreclosed properties are then sold by the bank at a public auction on the Chatham County Courthouse. If the house does not sell at the auction, the property then becomes known as a real estate owned (REO) property and then the bank will then sell the property utilizing a traditional real estate agent. As a homeowner, a foreclosure can severely damage your credit score, and make it very difficult to obtain a mortgage for many years.
To fully understand what is a foreclosure and how the process works, the best resource is on the State of Georgia website. There you can find several helpful links and a FAQ that fully describes what is required by law when your house is foreclosed.
What Is A Short Sale In Savannah?
According to the State of Georgia Website, “a short sale occurs when you sell your home for less than the balance remaining on your mortgage”. The important thing to remember here is that your mortgage lender must agree to the terms of the short sale. In some cases, your mortgage lender will require you to still pay the difference between the sale price and the mortgage balance. In other cases, your mortgage lender may release you from the obligation to pay the difference. Every case is different and only your mortgage lender will know the answer.
If you are attempting to pursue a short sale, you need to know that it typically takes some time. You will likely not get an answer right away from your mortgage lender. All parties who have a stake in the property must agree to the terms of the sale, and a potential deal could fall through if even one lender doesn’t agree.
Short Sale vs Foreclosure And Your Credit Score
When you go through a short sale or a foreclosure as a homeowner, your credit score will be impacted. Generally speaking, a short sale often has less of an impact on your credit score, somewhere around 100 points. On the other hand, if you go through a foreclosure, your credit score could be impacted by 300 or more points.
Borrowers who are foreclosed often won’t be qualified for a traditional mortgage to purchase another home for 5-7 years. If you go through a short sale, under certain circumstances, you can purchase again immediately.
Short Sale vs Foreclosure – Your Options
Many Americans are still struggling with the economic impact from the 2008 crash. Folks may be having a hard time making monthly mortgage payments or still dealing with the impact from a previous foreclosure. You may feel overwhelmed when choosing between a foreclose and initiating a short sale. The key is to start talking to your lender and exploring your options when you are having trouble paying your mortgage on time (or you can look into a 3rd option to stop foreclosure, selling your Savannah house fast )
Sometimes, lenders are willing to work with borrowers to complete a short sale, the bank also wants to avoid the fees and time-consuming process of conducting a foreclosure.
Our suggestion is always this.
- Talk with your lender and discuss ways that they can work with you on your loan. We offer this service where we can help guide you in the right direction if you run into issues with your lender… just reach out to us on our Contact page and we’ll discuss your situation.
- Attempt a short sale or other programs your lender may have that forgives part of your loan, creates a new / more affordable monthly payment so you can get back on your feet, etc. A great resource to start with is the state’s website regarding foreclosures and resources available to homeowners.
- If the bank isn’t willing to work with you very much… your best option may be to sell your house. Work with a local real estate house buyer service like Cash Homes Savannah to sell your house fast for an all-cash offer. If you’re interested we can look at your situation and make you a fair offer on your house within 24 hours. Just fill out the form on our website over here >>
- Foreclosure. The last resort is to let the house fall into foreclosure. This is the worst possible scenario. It’ll harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished.
By knowing your options, you may be able to dodge a significant impact on your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale can be the better option.
Need to stop foreclosure? We’d like to make you a fair all-cash offer on your house.