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

Foreclosure and short sale are two different processes a homeowner may engage in if they are unable to pay their mortgage or have too much debt. Even though these two processes can have similar results, there are important differences between them. Foreclosure is a legal process that occurs when the homeowner defaults on their mortgage and the lender takes possession of their property to recoup the money owed. This is usually done through an auction, where the lender sells the home to the highest bidder. The homeowner has no legal rights to the property once the foreclosure is complete. A short sale is a different process. In this case, the homeowner sells the home for less than what is owed on the mortgage. The lender approves the deal and takes the proceeds as payment in full. This means the homeowner does not have to pay the remainder of the mortgage, but they do not receive any of the profits from the sale. The differences between foreclosure and a short sale are clear. Foreclosure results in the lender taking control of the home and selling it, while a short sale is when the homeowner is able to sell their home and the proceeds are used to pay off the remainder of the mortgage. Furthermore, the homeowner does not receive any of the profits from a short sale, while they are not entitled to any of the proceeds from a foreclosure.

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

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