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

A foreclosure and a short sale both involve a homeowner who is unable to make the payments on their home. However, there are several differences that set the two apart. Foreclosure is when a lender takes possession of a property because a homeowner has stopped making payments on their mortgage. The property is then auctioned off to the highest bidder, with the proceeds going to the lender. Foreclosures can take several months to complete and they can have a negative effect on a homeowner’s credit score. A short sale, on the other hand, is a process in which a lender agrees to accept less than the full amount owed on the home in order to avoid foreclosure. The homeowner would need to negotiate with the lender to get them to agree to a short sale and it requires both the lender and the homeowner to sign an agreement. Short sales usually take less time than foreclosures and they can have a less damaging effect on a homeowner’s credit score. In Washington, the law varies depending on the particular circumstances of the homeowner’s situation. Homeowners should seek out legal advice if they are facing either a foreclosure or a short sale.

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