Posted on in Consumer Education
Question: Short Sale Vs. Foreclosure: How Does Each Affect My Credit? A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. In this time of option-arms coming due we will see more and more borrowers trying to negotiate short sales as opposed to going into foreclosure. In most cases the borrower are behind on payments and about to go into foreclosure. Some short sales are negotiated simply because a borrower knows they are upside down on their mortgage but has not reached the point where they have late payments. For example, the borrower’s loan is interest only and they have been unable to make principal payments. The original loan amount was $250,000 and they have been making the minimum payment and the loan balance has increased to $263,000. At the same time, the home only appraises for the $250,000 or possibly even less. Because the option-arm period is up, the borrower’s mortgage payments will increase […]
by jberman