What are the differences between a foreclosure and a short sale?

Foreclosure and short sale are two different methods for dealing with properties that are in default on loan payments. In Arizona, a foreclosure is the legal process that occurs when the mortgage lender (the lender that made the loan on the property) takes legal action to seize the home and recoup the outstanding loan amount. In this process, the court will issue a judgment of foreclosure and the lender will take control of the home. In contrast, a short sale is when the mortgage lender agrees to accept an amount for the home that is less than the amount owed on the loan. The lender will allow the home to be sold for the lower amount and then terminate the loan. The borrower can then be released from the responsibility of paying the remaining amount owed. The main difference between a foreclosure and a short sale is that a foreclosure is a legal process that could result in the borrower losing their home, while a short sale provides the borrower with an opportunity to pay off the loan at a discounted amount and avoid losing the home. However, both processes will impact the borrower’s credit rating and are likely to have financial repercussions for the borrower.

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What are the differences between a foreclosure and a short sale?

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