Foreclosures vs. Shortsales
Foreclosures and Shortsales… What’s the Difference?
Shortsales and foreclosures are options for borrowers who are experiencing financial challenges due to job loss or other event. Both options will negatively impact the borrower’s credit score, credit report and tax return.
A short sale is when a lender allows the borrower to sell their home for less than the balance owed. Choosing a short sale over a foreclosure is often the better choice because it is less detrimental to credit than a foreclosure.
The foreclosure process is when a lender repossess the borrower’s home. This often happens against the borrower’s will. Foreclosures remain on the borrower’s credit file for seven years which makes it difficult to receive approval for a new mortgage loan.