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

Foreclosure and short sale are two ways homeowners can address a mortgage that is becoming unmanageable. Generally speaking, a foreclosure occurs when a homeowner has stopped making their mortgage payments and the creditor, typically a bank, reclaims the property to recoup the losses resulting from the unpaid debt. Short sale, on the other hand, is an agreement between the home owner and the creditor to accept payment for the mortgage debt that is less than the amount owed. This type of transaction generally requires the approval of the creditor before it can be completed. Foreclosure and short sale are similar in that they both involve the sale of a home to satisfy a mortgage debt. However, foreclosure is a more punitive action than short sale and may negatively affect the credit score of the homeowner for up to seven years. Whereas, with a short sale, the homeowner may be able to negotiate a deal with the bank to avoid having their credit score affected. Foreclosure proceedings in the state of Florida are typically completed within four to six months, while a short sale can take up to three months or longer to be finalized. Short sale agreements may also come with a stipulation that the homeowner pay the difference between the amount owed and amount received from the sale. In conclusion, foreclosure and short sale offer homeowners different ways to address unmanageable mortgage debt. While foreclosure is a quicker process, a short sale offers the possibility of avoiding the consequences of a foreclosure and can provide the homeowner with more protection during the sale process. Before proceeding with either option, homeowners should consult with an experienced attorney to weigh their options and make sure they are in compliance with Florida foreclosure law.

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

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