A Foreclosure May Be Worse Than A Short Sale
These days, many are asking, is it better to lose a house to foreclosure, file for bankruptcy protection or undergo a shortsale?
None of the options are palatable. Generally, a foreclosure will remain on your credit report for 7 years, while a bankruptcy remains for 10 years. Depending on the lender and the current state of legalize filtering out of Washington, a short sale may or may not be to your benefit.
Before you accept that a foreclosure is imminent, consider trying to avoid the actual process. If you’re having trouble making payments, contact your lender before the proceesings goes any further. Even if you’ve received a document generally known as a “notice of default,” saying you’re several months behind, you still have time before the formal foreclosure process begins.
Another option is to consider moving. Even if you do lose your house, you don’t want a foreclosure or a bankruptcy on your record when you go looking for a smaller house or a place to rent.
One option is to ask the lender to hold off on foreclosing until you sell. If your mortgage is bigger than your house is worth, your looking at what’s called a “short sale” and you’ll owe money to the lender even after the house is sold. In some cases, lenders will let you off the hook for that amount rather than go through the expense of foreclosing.
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