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

Struggling to make your mortgage payments? you may be wondering if you should go through a foreclosure or short sale of your house. While both options will result in the loss of your home, they are very different processes with different consequences. It is important to understand the difference between the two before making a decision. If you’re more inclined to sell your Sacramento house, you might be wondering if it’s better to go through a foreclosure or pursue a short sale instead. Both options have their own set of pros and cons, so let’s take a closer look at each one so you can make the best decision for your specific situation.

What is a foreclosure?

A foreclosure occurs when you default on your mortgage payments and the bank seizes your property in order to recoup their losses. A foreclosure will stay on your credit report for up to seven years and will make it very difficult to obtain new financing during that time. 

What is a short sale?

A short sale is when you sell your house for less than what you owe on the mortgage. The proceeds from the sale go to pay off the outstanding debt, and any additional expenses are covered by the homeowner. A short sale will stay on your credit report for up to three years and will make it difficult to obtain new financing during that time. 

So, which is better? Let’s take a look at the pros and cons of each option: 

The Pros of a Foreclosure: 

The biggest advantage of foreclosure is that it may allow you to stay in your home until the process is complete. In most cases, the lender will not take possession of the property until after the foreclosure has been finalized. This means that you can continue to live in your home and possibly even make repairs or improvements that could increase its value.

Another advantage of foreclosure is that it may be easier to qualify for a new loan after the foreclosure process has been completed. This is because the foreclosure will usually stay on your credit report for seven years, while a short sale will typically remain on your report for 10 years.

The Cons of a Foreclosure: 

There are also some significant disadvantages to foreclosure. The biggest one is that it will have a major impact on your credit score, making it difficult to get approved for new lines of credit or loans. Additionally, you may have difficulty finding a place to rent or buy after a foreclosure as many landlords and sellers will be hesitant to work with someone who has gone through foreclosure.

The Pros of a Short Sale: 

For one, a short sale will typically have less of an impact on your credit score than a foreclosure. Additionally, you may be able to negotiate with your lender to have the remainder of your debt forgiven. This means that you could potentially walk away from your Sacramento home with no remaining mortgage debt.

However, there are also some disadvantages to a short sale. The biggest one is that you will likely have to move out of your home immediately after the sale is complete. Additionally, it can be difficult to find a buyer who is willing to work with you on a short sale, as most buyers are looking for properties that are priced at or below market value.

Making the decision to go through a foreclosure or short sale is never easy. However, it is important to understand all of your options and make the decision that is right for you and your family. If you need help deciding which option is best for you, please contact me. I would be more than happy to sit down with you and discuss all of your options in detail.

As you can see, there are pros and cons to both foreclosures and short sales. It’s important that you consult with an experienced real estate professional who can help you determine which option makes the most sense for your specific situation before moving forward with either one.